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Iraq to offer 10 fields in 2nd oil licensing round

Hussein al-Shahristani did not name all the fields that would be on offer, but said they would include the southern fields of Majnoon and West Qurna Phase 2 which hold reserves of roughly 12 billion barrels of crude each. The two fields currently produce far below their individual output potential of 600,000 barrel per day.

Al-Shahristani, in an interview late Monday night, told the state-run Iraqiyah television station that his ministry has focused on the fields which Iraq shares with neighboring countries, or that are located near borders.

“It is unacceptable that neighboring countries extracting oil from the shared fields while Iraq stands motionless,” he said. “We have decided to include these fields in the second licensing round and expedite” investments in them.

Iraq shares several oil fields with neighboring Iran and Kuwait. The Majnoon field, for example, borders Iran.

Al-Shahristani said Iraq’s oil exports in December averaged 1.85 million barrels per day, nearly 90,000 barrels a day more than in November.

The second licensing round is seen as crucial for the country, which relies on oil revenue for 95 percent of its budget. Decades of wars, U.N. sanctions, violence and sabotage have battered the industry and impaired the country’s ability to ramp up production.

The contracts from the upcoming licensing round, along with those from the previous round, could add another 4 million to 4.5 million barrels a day within four to six years, he said.

Iraq holds the world’s third largest proven reserves of crude, with more than 115 billion barrels of oil and an estimated 112 trillion cubic feet of natural gas. It currently produces about 2.4 million barrels of oil per day.

In June, Iraq opened its first postwar round of bidding for contracts to develop six major oil fields and two gas fields, choosing 34 of 120 oil companies that applied to participate. Among those selected were international energy giants Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp., Chevron Corp. and Total.

Ministry spokesman Assem Jihad told The Associated Press that international oil companies which did not qualify in the first round would be eligible for the second round.

The ministry plans to sign the contracts of the first round in mid-2009 while the second round end of the same year, al-Shahristani said.

The government has been grappling with the fallout from the plunge in oil prices, which have dropped about 70 percent from mid-July highs of nearly $150 per barrel. As a results, the Baghdad government was forced to slash its fiscal 2009 budget from $80 billion to $67 billion due to the crisis, and is mulling more cuts.