Big Oil Snubs Iraq’s Exploration Auction

No international oil major won any exploration and development contracts in Iraq’s Thursday auction of 11 oil and gas blocks, as the bidding attracted just one—unsuccessful—bid by a major company, Eni, while other Big Oil firms decided not to bid.

Iraq awarded six of the 11 blocks to Middle East and China-based companies, while five of the exploration areas up for grabs failed to attract any bids.

As of early April, as many as 16 companies—including Big Oil’s Exxon, Chevron, and Total—expressed interest in taking part in Iraq’s bidding round. The other interested bidders were Eni, Lukoil, Gazprom, Zarubezhneft, Petroliam Nasional Bhd, Oil & Natural Gas Corp, CNOOC, Geo-Jade Petroleum Corp, China ZhenHua Oil Co, United Energy Group Ltd, Dana Gas, Crescent Petroleum, and Dragon Oil Plc.

A few days later, Iraq’s oil ministry said that 14 companies bought a package containing the bidding documents and terms. At today’s auction—which was delayed from April 15 to tweak contract terms and give more time to the companies to study the provisions—only Eni of the big international groups bid on a block, and unsuccessfully at that.

Exxon, Total, Zarubezhneft, Lukoil, and Gazprom decided not to bid, Iraq’s director-general for upstream oil contracts, Abdul Mahdi al-Ameedi, said at the auction, without specifying reasons.

Out of the six blocks awarded, Iraq awarded three blocks to United Arab Emirates-based Crescent Petroleum, two to China’s Geo-Jade, and one to United Energy Group, based in Hong Kong.

According to al-Ameedi, the five blocks that didn’t get any offers have issues, such as being former battlefields or hard to access, while the offshore block on offer needs more data. The onshore bids that didn’t get offers include two blocks on the border with Iran and two on the border with Kuwait. The two blocks close to Iran were operating fields during the Iraq-Iran war and now the area is polluted and could contain buried explosives. Bidding on those blocks could have been further discouraged by the possible re-imposition of U.S. sanctions on Iran, Bloomberg quoted al-Ameedi as saying.

By Tsvetana Paraskova for Oilprice.com

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