Iraq Awards Some Oil and Gas Blocks as Exxon and Total Drop Out

(Bloomberg) -- Iraq awarded contracts for just over half of the energy deposits offered in an auction that failed to attract bids from most of the big oil companies that initially expressed interest.

Crescent Petroleum Co. of the United Arab Emirates, China’s Geo-Jade Petroleum Corp. and United Energy Group, with headquarters in Hong Kong, won contracts at the auction in Baghdad attended by Oil Minister Jabbar al-Luaibi. Exxon Mobil Corp., Total SA, Zarubezhneft OAO, Lukoil PJSC and Gazprom PJSC decided not to bid, Abdul Mahdy Al-Ameedi, director-general for upstream oil contracts, said at the bidding event, without giving a reason.

The auction is Iraq’s fifth since 2009 intended to draw new investment and boost oil and gas production. The country holds the world’s fifth-largest crude reserves, according to data from BP Plc, and is the second-largest producer in the Organization of Petroleum Exporting Countries. It pumped 4.43 million barrels of crude a day in March, data compiled by Bloomberg show, and intends to boost capacity to 6 million barrels a day by 2020.

Crescent Petroleum was awarded development and production contracts for the Gilabat and Qumar gas fields, with a remuneration of 9.21 percent net profit to the company, the lowest of all bids, al-Luaibi said. Its contract for the Khashim Ahmar and Injana gas fields has a remuneration of 19.99 percent, and its third agreement covers the Khider Al-Mai block in southern Iraq, with a remuneration rate of 13.75 percent.

Blocks that didn’t get any offers are Zurbatia and Shihabi on the border with Iran and Fao and Jabal Sanam on the Kuwait border. Zurbatia and Shihabi were operating fields during the Iraq-Iran war and the area is now polluted and possibly contains buried explosives, al-Ameedi said. The possibility of sanctions being reimposed against Iran by the U.S. may also have discouraged bidding for those blocks, he said.

Geo-Jade won energy rights at the Huwaiza field in the southern Missan province, with a 7.15 percent remuneration rate, according to al-Ameedi. United Energy Group got the Sindbad field, in the southern Basra province, with a remuneration rate of 4.55 percent, he said.

©2018 Bloomberg L.P.

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