By SINAN SALAHEDDIN
BAGHDAD
Iraq's oil minister on Thursday invited international energy companies to bid for contracts to develop three untapped natural gas fields in a latest move by the impoverished country to meet its growing need for power generation by developing gas.
Hussain al-Shahristani also announced that a separate multibillion-dollar joint venture deal with Royal Dutch Shell PLC to tap associated natural gas in the south has been submitted to the Cabinet's energy committee for approval and could soon be signed.
The three gas fields on offer in Iraq's third bidding round, set for Sept. 1, are the 5.6 trillion cubic feet Akkas field near the border with Syria, the 4.5 trillion cubic feet Mansouriya in Diyala province and the 1.1 trillion cubic feet Siba field near Kuwait and Iran.
Al-Shahristani said 45 international companies, which pre-qualified from previous two rounds last year, will be vying for the 20-year service contracts in which the companies will be paid a flat fee for their services rather than the more lucrative production-sharing contracts.
Akkas, which was discovered in 1992, was originally offered in Iraq's first bidding round last June but received only one bid from a consortium led by Italy's Edison, which was declined as it was higher than Iraq was willing to pay. Malaysia's Petronas, China's CNPC, Korea's Kogas and Turkey's TPAO were partnering with Edison.
Mansouriya gas field, which was discovered in 1979 received no bids in the June round. The Siba gas field, which was discovered in 1968, will be offered up for the first time.
"We have indications that there is renewed interest among companies to compete for these fields," al-Shahristani told reporters at the Oil Ministry in Baghdad as he announced the new bidding round.
"We hope to find a real competition between the companies and to get competitive offers," he added. "We expect that these companies will come with offers better than the ones they gave before."
On June 1, Iraq will submit the necessary data to the interested companies, which will then have two months to study them. They will hold a workshop on Aug. 1 before drafting the final contracts two weeks later.
Once these fields are put on stream, the production will be used to meet Iraq's growing energy needs as well as possibly exporting to neighboring countries or the European Union, he added.
Iraq sits on an estimated 112 trillion cubic feet of natural gas reserves but it produces only about 1.5 billion cubic feet a day, of which 700 million cubic feet is associated gas being flared off daily due to lack of sufficient infrastructure.
In a bid to exploit the flared gas, Iraq and Shell signed in Sept. 2008 a preliminary deal, but the final signing was delayed by political wrangling and financial issues.
That deal was first designed to tap all the associated gas in the oil-rich province of Basra, but al-Shahristani said Thursday it will be confined to only three oil fields that were part of the 10 oil deals awarded in previous bidding rounds.
They are the 17.8 billion-barrel Rumaila field being developed by a BP-CNPC consortium, the 4.1 billion barrel Zubair field, handled by an Eni-led consortium and partners Occidental Petroleum Corp. and KOGAS, as well as the 8.6 billion barrel West Qurna Stage 1, which is being developed by Exxon Mobil-Shell consortium.
Al-Shahristani said the two sides concluded the negotiations, drafted a deal and submitted it also to the Cabinet's energy committee for approval. Japan's Mitsubishi Corp. will hold a 5 percent in the deal.
Last month, Iraq approved an ambitious five-year-plan in which it is looking to increase its crude oil production to 4.5 million barrels a day by 2014 from the current 2.4 million barrels a day.
The plan foresees oil exports hitting 3.1 million barrels a day in 2014, up from current nearly 2 million barrels a day this year.
Iraq sits on the third largest oil reserves of at least 115 billion barrels but years of war, sanctions and neglect have hobbled its energy infrastructure. It also plans produce 2.75 billion cubic feet a day of gas by 2014, with the increase coming mainly from Akkas and Mansouriya fields.
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