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After the televised oil auction fiasco resulted in only one development contract being awarded, Iraq’s government has come out fighting by rejecting all of the remaining offers from foreign oil firms and stating that some of the fields will now be operated by state-owned companies.
News agency AFP reported that government spokesman Ali al-Dabbagh said the country’s cabinet had reviewed new offers from some of the bidding consortia, but had decided that the terms were not acceptable.
“The offers from the foreign companies were rejected by the government,” Dabbagh is reported by AFP as saying.
“If they want to have the oil fields they have to match the prices offered by the ministry of oil,” he added.
Controversy has surrounded the Iraq oil and gas field auctions ever since the country announced that it was making it’s hydrocarbon assets available to outside companies for the first time in 30 years.
The fixed-fee contract system, has proved to be extremely unpopular with IOCs and the price many of the bidding consortia wanted to be paid by Iraq has differed massively from the price Iraq was willing to pay.
It was because of this that only one contract ended up being awarded, the giant 17 billion barrel Rumaila in southern Iraq, to a consortium led by British supermajor and China National Petroleum Company (CNPC).
Now the Iraq Oil Ministry has to revert to its plan B — state-owned firms coming in to run certain fields.
”The two gas fields of Mansuriya and Akkas, and maybe the oil field of Kirkuk, will be exploited by national Iraqi companies,” Dabbagh told AFP.
Dabbagh’s statements will be welcomed by oil officials within Iraq. Before the auctions senior management figures from the state-controlled South Oil Company stated that many of Iraq’s fields should be operated by local companies.
