Three international oil consortiums have agreed to Iraq's terms for investment, which they rejected in a bid round this summer, to develop two oil fields in the south of the country, according to media reports of a press conference with Oil Minister Hussein al-Shahristani on Tuesday.
The auction in June offered 20-year development rights to six lucrative oil fields and two gas fields in the historic opening of Iraq's oil industry after 40 years of nationalization. While representatives of more than 35 international oil companies descended on Baghdad for the event, companies signaled by their actions that the security risks outweighed the rewards and the auction yielded only one deal (see "Race for Iraq Oil Stalled by Security Fear" in the October issue of Security Management).
Several international consortiums have now had a change of heart. Al-Shahristani said a consortium led by Italian energy company Eni has accepted the $2 per barrel fee from Iraq's Oil Ministry to develop the country's 4.1 billion barrel Zubair oil field, the Associated Press reported.
According to The Wall Street Journal, two consortiums, one led by U.S. oil major ConocoPhillips and Russian oil firm Lukoil, and another led by Exxon Mobil Corp., accepted the $1.90 per barrel fee to develop the West Qurna field, which has proven crude oil reserves 8.6 billion barrels, meaning the two companies are competing against each other to win the rights to help develop the field. Lukoil confirmed the talks to The Wall Street Journal.
"The price requested by all the other companies [in the first bid round] was at least twice as high—and in a couple of cases almost 10 times higher—than what the oil ministry was willing to pay," the AP reported. Eni previously bid $4.80 per barrel, while the Lukoil consortium offered an earlier bid of $6.49 per barrel. The Exxon Mobil-led consortium initially bid $4 per barrel, according to the AP.
The only field awarded in June was the giant Rumaila, which went to British Petroleum and China's CNPC after agreeing to accept only $2 per barrel.
Oil companies are vying for development rights that will result in per barrel payments, rather than a share in the profits.