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Iraq Oil Fields Up for Grabs

Brian Hicks

Written By Brian Hicks

Posted March 14, 2013

The Iraqi Ministry of Oil—the government agency that controls all gas and oil operations in Iraq—on Tuesday extended a bid to seven international oil companies that have qualified to participate in a bid for oil.

The winning bid will then be granted access to begin exploration and production efforts (upstream) as well as refinery (downstream) operations in its Nasiriyah oil field located in the country’s southern region.

There are also seven companies that were excluded from the bidding process during a prequalifying round.

The date on which the bids will be received is not yet known, nor is there a time table for the proceedings. What is known is that a discussion to elaborate and cover the bases of the contract will be held from April 8-9 in Amman, Jordan, Reuters reports.

The seven oil companies to qualify are: Zarubezhneft, Lukoil (PINK: LUKOY), CNPCI, Brown Energy, Reliance Industries (NSE: RELIANCE) , Total (NYSE: TOT), and JGC & Tonen General.

The Nasiriyah oil field is located in the Thi Qar province about 200 miles from the capital of Baghdad, and it holds 4.4 billion barrels of oil, according to Yahoo! News; the newly constructed refinery should push out 300,000 barrels per day.

The prize winning bid will have control of the Nasiriyah and will also be responsible for the construction of the region’s refinery, which is included as a package deal and will be held under one contract. The key to this agreement is that the winner must undertake the refinery—the first to be built in Iraq since the mid-1980s, the Iraq Oil Forum reports.

Iraq has been ready to unload the Nasiriyah for some time now and has continuously hit a snag along the way.

As Reuters reports, in 2009, a Japanese consortium of investors fell through at the negotiating table. Other interested parties have included Chevron (NYSE:CVX) of the United States, Eni SpA (NYSE: E) of Italy, and Japan’s JX Nippon. Chevron has since been barred from doing any business in Iraq after it made claims in parts of the northern Kurdish region without consent.

The 7 viable candidates in brief:

Zarubezhneft: Russia’s oldest oil and gas company founded in 1967. Its dealings are focused in foreign territories, and according to its company website, its activities involve exploration, development, and operation of oil and gas fields abroad.

Current operations: Vietnam, Cuba, Bosnia and Herzegovina, Croatia, Jordan, Russia, Turkmenistan and Uzbekistan.

Lukoil: Russia’s second largest oil company and the largest privately owned in the world by proved oil reserves. It accounts for 2.2 percent of global production of crude oil and has operations in over 40 countries.

Its scope of business includes upstream and downstream activities, power generation, and technology innovation.

CNPCI: Stands for China National Petroleum Corporation International and is a state-owned oil and gas corporation and China’s largest integrated energy company.

It currently has roughly 30 global upstream operations.

Brown Energy: A U.S. downstream operation that has the capacity to refine more than 150,000 barrels per day.

According to the company website, it specializes in refinement of crude oil and power generation. They possess expertise in project development and management, equipment supply, construction, and related services in the power generating industry.

Reliance Industries: India’s second largest company by revenue and a conglomerate that is a member of the Fortune Global 500. Its activities include both upstream and downstream operations.

Like Chevron before it, Reliance and Total both laid claims in Iraq’s Kurdistan region last year. Yet, unlike Chevron, they have both been granted access to bid for Nasiriyah oil.

Total: A French oil and gas company that is also one of six “Supermajor” oil companies in the world. It has businesses that run the entire gamut of the gas and oil industry.

JGC & Tonen General: A joint partnership between two Japanese firms. One—JGC, or Jupiter Green Investment Trust—generates global long-term capital growth by providing environmental solutions, and the second—TonenGeneral—operates in two sectors: petroleum and petrochemical. Together, both companies maintain upstream and downstream operations.


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