State oil and gas firm PT Pertamina has failed to join other world contractors in developing Iraq’s oil reserves.
The country’s government accompanied Russia’s Lukoil and Norway’s Statoil ASA joint venture instead.
Teamed with Malaysia’s Petronas and Vietnam’s PetroVietnam, PT Pertamina Hulu Energi (PHE), a Pertamina subsidiary, eyed to develop the massive West Qurna-2 oil block, but eventually lost.
“Our consortia offered the West Qurna block a high amount, but we lost to the Lukoil-Statoil consortia,” PHE director for overseas business development Dwi Martono said.
This year, Iraq began to tender its oil and gas fields internationally after Saddam Hussein’s regime nationalized the country’s oil and gas industry in 1972.
The two-day auction, held from Friday to Saturday last week, was the second petroleum bidding round held by the country this year.
Iraq offered 10 blocks in the auction, but only awarded seven contracts because there were no bids for the three other blocks.
Included in the winner list was the consortia of Lukoil and Statoil; a consortia of Royal Dutch Shell Plc and Petronas; a consortia of China National Petroleum Corporation (CNPC), Petronas, and France’s Total SA.
Lukoil and its partner Statoil won the rights to develop the West Qurna-2 block and agreed to produce 1.8 million barrels of oil per day (bpd) from the block.
Shell and partner has committed to pump the same amount of oil from the Majnoon block, and CNPC and partners won the Halfaya block, committing to pump 535,000 bpd from the block.
In the first round of the bidding in June, Iraq offered six oil and two gas fields, but the government was only able to award a development contract to one field, Rumaila, the largest of the fields offered.
The block’s development right was granted to BP and the CNPC.
At that time, many participants, including Pertamina, withdrew their bidding in the last minutes, saying that the scheme adopted by the Iraqi government was not economically viable.
However, later on last month, the government and bidders reached agreement for two other fields offered in the first round; the West Qurna-1 and the Zubair field.
The development right for the West Qurna-1 was awarded to US-based ExxonMobil and Shell, while the right for the Zubair field was awarded to Italy’s Eni SpA.
Iraq holds the world’s third-largest oil reserves and the government is upbeat to boost the production capacity to more than 12 million barrels a day.
Bloomberg reported that Iraq would receive about US$200 billion a year from the development contracts awarded to international companies in the two bidding rounds.
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