Companies Sign Agreements to Develop Iraq's Mansouriya, Siba Gas Fields
Kuwait Energy Co., Turkiye Petrolleri AO and Korea Gas Corp. signed contracts to develop Iraq’s Mansouriya and Siba gas fields at a ceremony in Baghdad, after winning rights to develop the deposits last month.
Iraq delayed signing an agreement for a third natural-gas field, Akkas, to “clear the misunderstanding” over the planned use of fuel from the deposit, Abdul Kareem al-Luaibi, an Oil Ministry deputy, said today. The signing for Akkas will take place after this week’s Eid al-Adha holiday, said Abdul Mahdy al-Ameedi, deputy director general at the ministry’s Petroleum Contracts and Licensing Directorate.
The foreign companies will join Iraq’s state-run North Oil Co. in separate ventures to start production at the gas areas. The agreements signed today must receive final approval from Iraq’s Council of Ministers, al-Ameedi said on Nov. 8.
The contracts, awarded last month in the country’s first auction of gas concessions since the U.S.-led invasion of 2003, mark a further step in Iraq’s effort to develop its oil and gas resources. Today’s signing followed two licensing rounds last year to assign development rights to the country’s largest oil deposits.
Fuel for Power
While Iraq generates most of its revenue from oil sales, the government wants to produce gas as fuel for power plants, which have been unable to meet domestic demand, and as a potential export.
Iraqi lawmakers endorsed Prime Minister Nuri al-Maliki on Friday to lead the next government after an eight-month political impasse. Al-Maliki has 30 days to form his government.
Kuwait Energy, Turkiye Petrolleri and Korea Gas, known also as Kogas, won rights to develop the Mansouriya field and pledged to produce 320 million standard cubic feet of gas a day there for $7 per barrel of oil equivalent. Kuwait Energy and Turkiye Petrolleri also won bidding for the Siba field, agreeing to produce 100 million standard cubic feet of gas a day at a price of $7.50 per barrel of oil equivalent.
Kogas and Kazakhstan’s state fuel producer, KazMunaiGaz National Co., won rights to develop Akkas, the largest of the three gas fields for which Iraq’s government awarded licenses on Oct. 20. The two partners, with equal stakes in their bidding group, agreed to produce 400 million standard cubic feet of gas a day at Akkas at a price of $5.50 per barrel of oil equivalent produced.
Seeking Assurances
Kogas and KazMunaiGaz had asked for assurances that authorities in Anbar province, where Akkas is located, approved their contract before they would agree to sign it, the directorate’s al-Ameedi said. The oil ministry was in contact with the companies and Anbar officials to settle the misunderstanding, said al-Luaibi, the ministry deputy.
Mansouriya, Siba and Akkas together hold 11 trillion cubic feet of gas, Oil Minister Hussain al-Shahristani said at the October auction.
Iraq wants foreign investors to help it increase production of oil and gas to stimulate a recovery after years of conflict and economic sanctions. Iraq has the world’s fifth-largest oil reserves, and its gas reserves rank fifth in size in the Middle East, according to data from BP Plc.
The gas-licensing round was Iraq’s third auction of rights to develop hydrocarbons since the 2003 invasion that toppled former President Saddam Hussein.
Iraq won pledges from Exxon Mobil Corp., OAO Lukoil and other energy companies to boost the country’s total crude production to 12 million barrels a day after two licensing rounds last year. The nation pumped 2.4 million barrels of oil a day in October, according to Bloomberg statistics.
To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net.
To contact the editor responsible for this story: Maher Chmaytelli at mchmaytelli@bloomberg.net.
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