By Ahmed Mousa Jiyad.
Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
The Ministry of Oil should withdraw its plan to offer 12 new oilfields.
In a rather surprise move, the Ministry of Oil (MoO) announced its “intention” to offer 12 medium and small oilfields to IOCs for development and production.
The most alarming and absurd components of the announcement are the contractual modality and the process of awarding and contracting.
Considering the danger and implications of the announcement I call upon the Ministry of Oil to withdraw this announcement immediately and focus instead on properly manage and monitor what has been contracted already. Otherwise, the Iraqi upstream petroleum could suffer from devastating consequences at a time when the country is liberating its provinces, especially Mousil from Da’esh.
The offered fields are Sindebad, Um-Qaser, Rachi and Abu-Khema (in Basra Governorate); Kumait, Noor, Umara, Dema and Dujaila (in Missan Province); and Merjan, Kifl and West Kifl-all known as Mid-Euphrates (in Middle Iraq). MoO announcement provides further information which will be addressed in this commentary.
At the outset, this is not a new move at all. After completing the fourth bid rounds, the MoO has at least formally announced three times its intention for new offering. The first was during the former Minister Abdul Kareem Luaibi, who in March 2013 announced a fifth bid round comprising “10 oilfields”, then in October he postponed that round to “next year”.
The second was related to the well-known Nassiriya Integrated Project-NIP, which combines the development of Nassiriya oilfields with a 300kbd modern refinery. Though NIP attracted good number of reputable IOCs, the project was put on shelves and related bid round was postponed indefinitely in June 2014. Recently, MoO offered Nassiriya Refinery for private investors, thus NIP is dead!
The third is related to linking Ratawi and Bin-Umar oilfields (in Basra) to funding the water-injection Common Seawater Supply Project (CSSP) reportedly negotiated with ExxonMobil and PetroChina (CNPC). Since January this year no further information is publically available on earmarking the two oilfields to CSSP.
The current Minister of Oil made many pledges when he took office among them two of particular relevance to this topic: first, he emphasized the “national efforts” in upstream petroleum development and second, decision will be based on “solid and thorough studies and assessment”. The recent announcement by the Ministry is diametrically opposing to what the Minster has recently pledged.
By offering these 12 oilfields to IOCs “whether as independent (individual) company or as consortium of companies” in addition to what was contracted under the previous four bid rounds nothing meaningful is left for the “national efforts” role in this sub-sector. Moreover, where are these “solid and thorough studies and assessment” which the recent announcement was premised upon? None!
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Mr Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: email@example.com, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.