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. Iraq eyes top spot after oil auction 'victory'

A partial view shows the southern Iraqi Shuaiba oil refinery near the port of Basra, 550 kms south of the capital Baghdad, on December 11, 2009. Iraq signed deals with consortiums led by energy giants Shell and CNPC over massive southern oil fields, part of a two-day auction that seeks to dramatically boost the country's crude output. Photo courtesy AFP.Iraq will be 'big player' at OPEC meet: US diplomat
Baghdad (AFP) Dec 13, 2009 - Iraq will be a "big player" at OPEC's meeting in Angola later this month over its allocated crude production quota following a string of deals with oil majors, a senior US embassy official said on Sunday. The Organisation of Petroleum Exporting Countries meeting in Luanda on December 22 will come shortly after Baghdad set ambitious output targets at a Friday-Saturday auction of Iraqi oil field contracts to foreign energy firms. "They're going to have to negotiate with their OPEC partners on that one," the official at the embassy in Baghdad told reporters, on condition of anonymity, referring to Iraq's production aims and its OPEC quota. "They're going to be a big player that wants to come back to the table, so they're going to have to negotiate with Saudi Arabia, Iran, Venezuela and the other OPEC members."

Iraq currently produces around 2.5 million barrels of oil per day (bpd). But after awarding seven contracts to foreign energy firms at the auction, following three more deals sealed since a first auction in June, it aims to ramp up output to 12 million bpd within seven years. Since economic sanctions of the Saddam Hussein era after his 1990 invasion of Kuwait, Iraq has been the only OPEC member not bound by the OPEC quota system and the cartel's overall output ceiling of 24.84 million bpd. The US official added there was still time for OPEC to reach accord on Iraq's quota, as it would be several years before the country will be in position to hike output to its targeted levels. "This isn't like suddenly tomorrow (Iraq is) going to be producing 12 million barrels," the official said.

Iraq, Angola's Sonangol strike deal over oil field
Baghdad (AFP) Dec 12, 2009 - Angolan energy firm Sonangol said it reached agreement with Iraq on Saturday over the Qaiyarah field in northern Iraq. The two sides had failed to strike a deal on Friday when Qaiyarah was auctioned because Sonangol refused to lower the per-barrel fee it would accept to work on the field to five dollars from an initial offer of 12.50 dollars. "We discussed this, and we found the five-dollar operating price acceptable," a spokesman said at the oil ministry hall where the auction is set to continue on Saturday. The firm will sign a preliminary contract with Iraq in two weeks, Oil Minister Hussein al-Shahristani said. Sonangol was the only company to submit a bid on Qaiyarah, which is in Nineveh province in northern Iraq with projected output of 120,000 barrels per day. There is currently no production at Qaiyarah, which has known reserves of 807 million barrels. Iraq is carrying out two days of auctions on rights to exploit oil fields as it seeks to dramatically boost its crude output and become one of the world's biggest oil producers.
by Staff Writers
Baghdad (AFP) Dec 12, 2009
Iraq on Saturday awarded oil contracts to foreign giants at an auction it hopes will hike output to 12 million barrels a day and put it on a par with the world's top producer Saudi Arabia.

Baghdad sold Russian firm Lukoil rights to one of the world's biggest untapped oil fields on the auction's second day, after striking deals with Anglo-Dutch company Shell, China's CNPC and Malaysia's Petronas on Friday.

"This represents a victory," Oil Minister Hussein al-Shahristani told reporters at the end of the sale. "The fortune will not be spent on wars as it used to be."

The money generated would "be for the Iraqi people -- we will not share it with anyone. We in the ministry are very happy with what we have achieved for Iraq," he said.

Deals reached at the two-day auction would boost Iraq's oil production by more than 4.7 million barrels per day (bpd) over the next several years, from the current 2.5 million bpd.

But Shahristani said the war-torn country's oil output would reach 12 million bpd within the next six years, based on all the contracts it is negotiating.

"That is the highest production level of the world's oil-producing countries," he declared.

But analysts said the Iraqi authorities were being overly optimistic.

"The question now is, is this realistic?" Ruba Husari, the Baghdad-based founder and editor of www.iraqoilforum.com, asked regarding the production targets. "Can they (the companies) deliver?"

The biggest agreement struck during the auction was for the West Qurna-2 oil field, awarded on Saturday to Lukoil, which will work with junior partner StatoilHydro of Norway.

Lukoil and StatoilHydro requested 1.15 dollars for each barrel extracted from the giant field and projected output of 1.8 million bpd.

West Qurna-2, with known reserves of 12.9 billion barrels, lies in southern Iraq to the west of the equally enormous Majnoon field, which was auctioned on Friday to Shell and Petronas.

Shell and Petronas will receive 1.39 dollars per barrel of oil from Majnoon, which has proven reserves of 12.6 billion barrels, and project that they will produce 1.8 million bpd.

CNPC led a group comprising Petronas and France's Total on Friday to secure Halfaya, a southern field with reserves of 4.1 billion barrels. They will receive 1.40 dollars per barrel with estimated output of 535,000 bpd.

"The bidding was very aggressive, and Iraq has secured very favourable terms," Alex Munton, Middle East analyst for research group Wood Mackenzie, told AFP.

"It is now is in a position to see large-scale investment from companies that have the capability and the access to technology and resources that Iraq has never benefitted from."

On Saturday, deals were also reached over the Garraf, Najmah, Qaiyarah and Badra fields.

Angolan firm Sonangol won contracts to develop both Qaiyarah and Najmah, which lie close to each other in the northern province of Nineveh.

Its 12.50 dollar a barrel request for Qaiyarah had been rejected on Friday as too high. The company lowered the figure to five dollars on Saturday morning and clinched a deal.

Sonangol will produce a combined 230,000 bpd from the two fields.

A joint bid from Petronas and Japan's Japex scooped the Garraf field in southern Iraq, and will lead to additional output of 230,000 bpd at a price of 1.49 dollars a barrel.

And a consortium led by Russia's Gazprom was awarded a contract to work Badra, near the Iranian border, and produce 170,000 bpd. The group, which includes Petronas, South Korea's KoGas and Turkey's TPAO, will receive 5.50 dollars a barrel.

Companies shied away from the East Baghdad field, and two clusters known as Eastern Fields and Middle Furat.

Analysts said this was because of continuing violence in East Baghdad and Eastern Fields, while Middle Furat was expensive as it lacked infrastructure.

At 115 billion barrels, Iraq has the world's third-largest proven oil reserves, behind only Saudi Arabia and Iran. Oil sales provide 85 percent of government revenues.

Baghdad relies massively on oil sales for its economic growth and government income. It will be hoping the auction generates positive headlines ahead of a parliamentary election scheduled for March 7.

Ironically, given accusations in some quarters that the United States led the 2003 invasion of Iraq to grab its oil wealth, only one US firm even participated in the bidding and it came out empty handed.

However, ExxonMobil was the senior partner in a group awarded the West Qurna-1 field last month.

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