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Saudi Aramco Makes Existential Bet On Oil

Saudi Aramco Makes Existential Bet On Oil

Saudi Aramco has doubled down…

Iraq To Offer Oil Fields Directly To Foreign Firms

Basra oil field

The Iraqi oil ministry will negotiate directly with international oil companies (IOCs) and consortiums in the upcoming bidding of a dozen small- to medium-sized fields located in the provinces of Central, Basra and Misan.

According to a tender document on the ministry's website and cited by Reuters, firms will be permitted to “submit their own proposals for contractual, commercial and financial terms and conditions.”

Officials pre-qualified nineteen firms from around the world to participate in the bidding process, including six from Japan and others from countries such as Russia, Italy, and the United Arab Emirates.

In addition, firms that have not been prequalified may also participate in the process after paying a US$15,000 fee as well as submitting proof of their technical and financial capabilities. To help with that process, the ministry has offered a data package with the price tag of US$50,000.

The Iraqi government’s appeal to deal directly with oil companies signaled a shift in its strategy away from prior contract offers for the country’s huge southern fields such as Rumaila and Majnoun. The oil ministry pays IOCs a fixed dollar-denominated fee for every barrel of oil produced as part of the service-based agreements reached between the parties.

Related: Iran Proving To Be Its Own Worst Enemy For Oil Development

The slump in the price of oil since 2014 forced Iraq to receive less revenue from the commodity while paying the same pre-2014 fees to the likes of BP, Shell, and Lukoil. Thus, the ministry has sought to renegotiate these deals to allow fees that are flexible with market fluctuations and to force IOCs to pay a greater share when prices sink.

Futures on Monday fell to their lowest point in a week over the Iraqi government’s desire to be exempt from planned Organization of the Petroleum Exporting Countries (OPEC) production limits. Oil Minister Jabbar Al-Luaibi said Iraq continues to be embroiled in clashes with extremist militants; thus, the country should not be subjected to whatever OPEC output conditions are agreed upon on November 30.

By Erwin Cifuentes for Oilprice.com

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