Royal Dutch Shell today won a contract in an historic auction to develop a major Iraqi oil field.
The Anglo-Dutch company, in partnership with Malaysia’s state-run Petronas Carigali, beat a consortium of France’s Total and China National Petroleum Corp (CNPC), to develop Manjoon, a 12.88 billion barrel site in the Basra region. The oil field is one of the largest in the world.
The Shell-Petronas consortium will receive $1.39 a barrel produced from the field. The companies said they would raise production from the current 45,900 barrels per day to 1.8 million barrels per day over a 10-year period.
The second wave of auctions comes 30 years after Saddam Hussein nationalised the oil sector and kicked out foreign firms.
However, the June auction round was a flop as firms resisted the financial provisions imposed by Iraq.
Iraq secured just one deal to develop an oil field out of eight massive oil and gas fields it had put out to tender. Firms were left shaking their heads at exacting contract terms.
Oil executives also expressed concerns about the transparency of the political process and business dealings in Iraq. At the same time the Iraqi oil minister Hussain al-Shahristani faced domestic criticism for offering Iraq’s most prized asset too cheaply.
At the start of today’s auction Iraqi Prime Minister Nouri al-Maliki, looked to allay concerns about bombings and other incidents that have plagued the oil-rich nation since the 2003 US-led invasion to topple Saddam Hussein.
Al-Maliki told company representatives: “There is no security deterioration in Iraq even if a security violation took place here.”
International oil companies are vying for the biggest slice of Iraq’s oil riches on offer in decades. A total of 15 fields were up for grabs today and tomorrow, representing about one third of the country’s reserves.
There are 45 firms vying for the contracts, including UK’s BP as well as the US ExxonMobil.
The Manjoon oil field is the biggest of the 15 fields on offer in the two-day licensing round. A second consortium led by CNPC won the rights to the Halfaya field, also in the south of the country.
In the June auction, a BP-led consortium secured rights to one of Iraq’s biggest oil fields.
The oil major teamed up with CNPC for the bid to land the contract for the Rumaila oil field, which holds 17.8 billion barrels in crude reserves.