Despite the difficulties that are engulfing its energy sector,
Baghdad had some reason to feel good this month. At the end of September, the
cabinet approved three of the oil and gas contracts that were awarded to foreign
firms in the May licensing round. According to government spokesman Ali
Al-Dabbagh, the cabinet approved a gas exploration contract with
Pakistan Petroleum to develop gas block 8, a 6,000 sq km block
in the east central part of Iraq, about 40km east of Baquba. Pakistan Petroleum
won the tender with a remuneration fee of $5.38/barrel oil equivalent.
Also approved was the contract with the consortium led by
Russia's Lukoil to develop block 10, a 5,500 sq km site, 120km
west of Basra. The cabinet also approved an initial deal with Russia's
Bashneft to develop block 12 in the western desert. Bashneft
had originally bid on this block as part of a consortium with
PetroVietnam as operator. However, the $9.85/barrel
remuneration fee bid in the round was too high and the bid rejected. Bashneft
has since entered into an agreement with Baghdad for the block.
The cabinet was also expected to approve the contact signed
with a consortium led by Kuwait Energy in
partnership with TPAO and Dragon Oil
for block 9 in Basra. However, according to Al-Dabbagh, the cabinet
decided to delay approval until the “oil ministry completes some of its
procedures”.
© 2012 Menas Associates
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