Asim Jihad, oil ministry spokesman, announced on Sunday that Iraq is now planning to award oil and gas exploration and development contracts in 11 new blocks on April 15. Nine exploration blocks in Central and Southern Iraq were initially offered last year and now two more have been added. The announcement took international company representatives by surprise. The date was brought forward, from June 21, so oil companies can bid on exploring and developing the about a dozen hydrocarbon-rich areas.
The new blocks are located in offshore Gulf waters and in the border areas with Iran and Kuwait. Oil companies that are planning to make the offers will get the bidding documents on April 13 as told by the spokesman to Reuters. Bidding offers will have to be submitted on April 15 and the winners of the bid will also be announced on the same day.
On Thursday, the oil ministry announced its measures to reduce the fees in the new contracts received by the oil companies from the government, which includes oil by-product exclusion from the company’s revenues and establishing a linkage between prevailing oil prices and their remuneration. Currently, the Iraqi government pays a fee to its oil producers which is linked to production increases including crude and oil by-products like liquefied petroleum gas and dry gas. The new contracts will also introduce a royalty element.
The contract change was decided by OPEC, subsequent to a glut causing oil prices to crash in 2014 and rendered Baghdad unable to pay the fees, and would also have a time limit for companies to end gas flaring developed from oil fields. Iraq hopes to end the gas flaring by 2021.
