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Iraq sets new oil and gas auction for January

by Staff Writers
Baghdad (AFP) April 25, 2011
Iraq will auction 12 oil and gas exploration blocs to foreign firms in January 2012, the fourth opening of its energy sector since Saddam Hussein's fall, the oil minister said on Monday.

Abdelkarim al-Luaybi's announcement came as his ministry announced record revenues from crude exports as Iraq seeks to ramp up production to help rebuild its war-shattered economy.

"The auction will take place in the first month of 2012," Luaybi told reporters in Baghdad. The bidding will be "for 12 exploration blocs, seven for gas and five for oil."

The auction is the fourth round of bidding for foreign companies, following similar sales in July and December 2009, as well as last October. Iraq's energy sector was closed off before the 2003 US-led invasion which toppled Saddam.

"The auction continues the work of the ministry and the three previous auctions, and the aim is to increase (proven) oil and gas reserves" through new finds, Luaybi said.

He said the blocs on offer were in the provinces of Babil, Basra, Dhi Qar, Muthanna, Najaf, Diwaniyah and Wasit in the south, Diyala and Nineveh in the north, and Anbar in the west.

Iraq has so far signed 11 oil contracts with international energy companies following the two auctions in 2009. Last year, it also awarded three gas fields for exploitation, vying to become an international player in the gas market.

Current oil production is around 2.5 million barrels per day (bpd), of which about 80 percent is exported.

Gas production -- all associated discharge from oil wells -- is 1.5 million cubic metres (53 million cubic feet) a day, but half is burned off in flares from oil wells, experts say.

The oil ministry announced on Monday that oil exports in March had generated $7.1 billion, the highest level of income from a month of crude sales since the invasion.

Iraq exported 66.9 million barrels of oil last month at average oil prices of $107.13, the ministry said in figures published on its website.

Oil prices are currently at around $112 a barrel, with escalating tensions in Libya, Syria and Yemen heightening fears of supply disruption in the Middle East and North Africa.

The higher prices will lead to a budget bonanza for Baghdad, which based its annual budget in February on oil prices of $76.50.

Crude sales account for some 90 percent of revenues, with the government trying to upgrade outdated infrastructure and spur economic growth after being crippled by decades of conflict and sanctions.

As part of its plan to boost output, Baghdad is also trying to build up infrastructure for exports.

However, analysts and the International Monetary Fund have expressed doubts over Iraq's aims of building up production to more than 10 million bpd in the coming years.

In September, Iraq signed a deal with Turkey to extend its use of the Ceyhan pipeline for a further 15 years, and also reached an agreement with Syria to build two pipelines connecting it to more Mediterranean ports.

But the Iraqi parliament has yet to pass a key hydrocarbons law, which has been repeatedly delayed.

Adoption of the law, which would regulate the sector and divide responsibility between Baghdad and Iraq's provinces, has been held up since 2006 over disagreements between MPs from the country's various communities.

Iraq sharply raised its figure for proven oil reserves in October to 143.1 billion barrels, a 24-percent increase over the old level of 115 billion barrels, placing it in the very top tier of energy-rich nations.

The ministry estimates gas reserves at 129 trillion cubic metres.

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