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Iraq's oil auction like 'Eurovision Song Contest'

by Kevin Baxter on Jun 29, 2009


Iraq's live TV auction has been likened to the Eurovision Song Contest. Oil companies are dreading getting nil points. (Olle Lindeborg/AFP/Getty Image
Iraq's live TV auction has been likened to the Eurovision Song Contest. Oil companies are dreading getting nil points. (Olle Lindeborg/AFP/Getty Image

Related: Iraq to impose 35% tax on foreign oil firms | Iraq says Kurdistan oil contracts illegal | Iraq oil ministry under fire from parliament | Iraq sends out revised model contracts to IOCs | Iraq's oil minister survives parliamentary mauling

Oil companies looking to win contracts to develop Iraq’s vast oil reserves will have to battle it out live on Iraqi television after details of the auction were revealed.

The likely scenario is that the interested parties, all of which have been pre-approved, will submit a sealed bid for each of the six oilfield and two gas field contracts that are available. The bids will the be compared to the other offers and following a live discussion the Iraq government will announce the winning bidder immediately on live television.

The method, likened by some oil officials, quoted in the UK newspaper the Daily Telegraph, to the "Eurovision Song Contest" or a “game show for energy companies”, is  being implemented to ensure the proceedings are carried out with total transparency.

Samuel Ciszuk is the Middle East energy analyst for IHS Global Insight. Ciszuk believes that while the televised auction may alter the way the companies would will bid. 

"The IOC negotiators' bids will be published immediately upon their opening, being processed field by field and thus exposing the IOCs' overall bidding strategies to each other," Ciszuk said. 

"This is likely to have altered their choice of bidding tactics, making this round a particularly interesting process to follow," he added



Most of the world’s major oil companies are taking part in the auction, including ExxonMobil, BP and Royal Dutch Shell. The contracts on offer are worth a total of US$16 billion.

It is believed that Iraq’s reserves of oil could rival Saudi Arabia’s if the fields are developed with the right expertise and that the contracts on offer could yield upwards of $1 trillion over the next 20 years.

Speculation has also been mounting regarding any bid made by Chinese energy giant Sinopec. The company recently bought Addax Petroleum for around $7.2 billion in a strategic move to tap into the production deal the company has with the semi-autonomous Iraqi Kurdistan for the Taq Taq oilfield. The Kurdistan Regional Government’s oil contracts have been called illegal by the Iraq Oil Ministry in Baghdad. 

The auction was due to start today, but was postponed due to a sandstorm hitting Baghdad.

Initial bidding and award ceremony schedule
 
Day One
Rumaila 09:00 (local time), Mansuriya 11:00,  Bai Hassan 14:00, Zubair 16:00
 
Day Two
Missan Fields 09:00, Kirkuk 11:00, Akkas 14:00, West Qurna-1 16:00

Full list of Iraq oil contract bidders

BHP Billiton, Eni, LUKoil, Occidental Petroleum, Sinochem, BP, ExxonMobil, Maersk Oil, ONGC, Sinopec, Chevron,  Hess Corp., Marathon, PT Pertamina, StatoilHydro, CNOOC, INPEX Corp., Mitsubishi, Petronas, Total, CNPC, JAPEX, Nexen,  Repsol-YPF, Turkish Petroleum Corp. (TPAO), ConocoPhillips, Gazprom Neft, Nippon Oil, Shell, Woodside Petroleum, Edison,  Korea Gas Corp. (KOGAS)       

Source: IHS Global Insight, Iraqi Oil Ministry, media

 


FEATURED COMMENT

Eurovision attracts far more entries. Until Iraq pays a realistic price to IOCs it's nil points for Shahristani et al.

  1 Comments


Readers' Comments


Bob Ford (Jul 1, 2009)
London
United Kingdom

Like Eurovision?
Eurovision attracts far more entries. Until Iraq pays a realistic price to IOCs it's nil points for Shahristani et al.


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