Iraq Awards Oil Field Contracts to Foreign Companies
Despite a myriad of political and security troubles, Iraq has begun concentrating on its economic future, awarding contracts to one of the world's most significant untapped oilfields. Oil giant Royal Dutch Shell and Malaysia's Petronas won the right to develop the Majnoon oil field after strenuous bidding.
Last updated on: December 11, 2009 7:55 AM
Ongoing political and security woes were eclipsed by economic concerns, Friday, as Iraq awarded the rights to develop one of the world's last remaining oil-megafields. Royal Dutch Shell and Malaysia's Petronas won contracts to exploit the Majnoon oil field, near the Iranian border, amid fierce competition.
Iraqi TV reported that foreign oil company representatives "turned out in large numbers" to bid for the oil contracts, "despite potential security fears." It was the second time that Iraq has held an auction of oil contracts since the 2003 US-led invasion.
Prime Minister Nouri al-Maliki addressed oil company representatives at the auction in Baghdad, noting that the very existence of Friday's auction was a sign of how much progress Iraq has made on the political and security fronts.
He says that he wants to thank those companies bidding for the confidence that they are showing in Iraq and in its political system, security and the economy, such that they have turned out in such large numbers. This, he emphasizes, shows that they understand when bidding and competing, that Iraq's guarantee is good, despite eventual upheavals, and that they have the protection of our democratic, constitutional system.
Both Royal Dutch Shell and Petronas won the Majnoon oil field contract after bidding $1.39 per barrel as their fee to develop and exploit the massive, untapped oil reserves. The companies also proposed to ramp up production from the field to 1.8 million barrels per day, or well beyond Iraqi expectations.
Iraqi oil minister Hussain al-Shahristani indicated that the exploitation of the Majnoon oil field will dramatically enhance Iraq's position as an oil-producing nation, by increasing production three-fold in the years to come:
He says that this will cause a massive increase in Iraq's national production of crude oil, bringing daily production to 7 million barrels a day at peak levels -- or more than three times current production.
Meanwhile, a consortium including France's Total SA, China's National Petroleum Corp and Petronas, won the rights to Halfaya oil field, also in the south. They will get $1.40 per barrel and have pledged to raise production to 535,000 barrels a day.
But there were no offers for a grouping of four fields in the more dangerous east or for a 5th field near Baghdad.
Iaq has an estimated 115 billion barrels of known oil reserves, or 10 percent of the world total. Analysts say that fewer than a third of the country's documented oil fields are now being exploited.