Iraqi oil sector opposition to auction widens
An Iraqi oil industry revolt against Baghdad’s upcoming auction of contracts to develop its prized oil fields widened yesterday, and the head of the country’s main oil producing unit proposed an alternative plan.
A petition against the auction by engineers at the state-run South Oil Co., which produces the bulk of Iraqi crude, has gathered 200 signatures, and other workers at the company said they were starting their own petition.
“After finishing both campaigns we will submit the petitions to the prime minister (Nuri al-Maliki) asking him for a chance to develop the oil fields ourselves because we have the experience to develop these fields,” said senior South Oil Co engineer Safaa Zaboun.
South Oil Co boss Fayad al-Nema upset the Iraqi oil industry last Sunday when he rejected the Oil Ministry’s auction of major oil field service deals, which is due to be held over two days at the end of June. This would be the first such auction since the 2003 fall of Saddam Hussain.
The auction is one of two bidding rounds, the first being for contracts to develop Iraq’s six largest oil producing fields and two undeveloped gas fields. The second is for non-producing oil and gas fields, to which Nema has no objections.One of Nema and Zaboun’s main objections to the first bidding round is that it involves already producing fields, in which they say Iraq has invested billions of dollars and where Iraqi engineers already have expertise.
Nema said on Friday that the bidding round should be scrapped. Foreign firms should instead be invited to work on less developed fields using short term technical support (TSC) and engineering, procurement and construction (EPC) contracts.
The contracts currently on offer in the first bidding round last 20 years and are more comprehensive.
He suggested only Iraq’s super giant Majnoon, Nahr bin Omar and East Baghdad fields be offered, as well as the smaller but also giant al Gharraf, al Nassiriya, Qayara and Balad fields.
“Foreign firms could develop these fields. They could take on all the investment costs and the Iraqi treasury wouldn’t have to pay a dollar,” Nema said. “There are countries thirsty for Iraqi oil and are ready to shoulder all the investment costs, without Iraq paying a thing.”
Deals to develop Iraq’s vast oil reserves, the world’s third largest, are a huge prize, but the South Oil Co.’s objections have heaped risk on an already shaky venture.
Iraq’s hydrocarbon laws, which outline who has the right to exploit its oil and gas, have for years been held up in parliament due to disputes with Iraq’s semi-autonomous Kurdish region, one of the country’s two main oil producing areas.
On Thursday, the northern region’s natural resources minister reconfirmed his rejection of the Oil Ministry’s contracts, which he said the Kurds had not been consulted on, even though they involve fields in areas disputed by Kurds, Arabs and Turkmen.
He warned that oil firms would be hamstrung if they attempted to work in those fields without Kurdish approval.
The South Oil Co’s objections mean foreign firms also face the prospect of unco-operative partners in the Iraq’s south, home to the bulk of Iraqi reserves.http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=298309&version=1&template_id=48&parent_id=28