Iraq Prepares Iran Pipeline Bid

A0399457.jpgTEHRAN (FNA)- Iraq announced tenders for international oil companies to test two of its largest oil fields, develop a major natural gas field and build a pipeline to Iran.

The four tenders, revealed on the Iraqi Oil Ministry Web site, are part of the country’s larger effort to increase oil production and exports while meeting domestic demand.

Iraq is producing about 2.4 million bpd of oil and exporting 1.9 million bpd, the highest rate of consistent output since 2003. Iraqis face massive fuel and electricity shortages, however, due to a lack of refining and other infrastructure capacity.

Companies have until April 30 to file applications to conduct 3-D testing of the super giant Rumaila and Kirkuk oil fields. The fields contain proven reserves of 17 billion barrels and 10 billion barrels, respectively.

Iraq has 115 billion barrels of proven reserves — the third largest in the world — but is underexplored due to Saddam Hussein’s mismanagement of the oil sector, UN sanctions and post-2003 security conditions.

A meeting will be held by the ministry in June followed by bid selection and work to begin during the last three months of the year.

Both fields are among five under negotiation for Technical Support Agreements between the ministry and Shell, BP, Chevron, ExxonMobil and Total. The TSAs would be two-year deals where the companies would be paid to provide equipment, training and studies. Each field would increase production by 100,000 barrels per day, the ministry said.

The ministry is also accepting bids to develop the Akkas gas field, located near the Syrian border. The field has 2.1 trillion cubic feet of gas and is pegged for export to Syria and potentially to Turkey and Europe. It’s located in a once more dangerous area of Anbar province and could be the first large hydrocarbons development in an area of Iraq that is majority Sunni Arab.

The fourth tender is for engineering, design, study and procurement of materials for a project to send Iraqi oil to Iran and Iranian-refined products to Iraq. The pipes themselves have already been purchased. The pipelines would run below the Arvand Rud (or as Arabs call it the Shatt al-Arab) waterway on Iran-Iraq borderline in the south.

The Akkas and pipeline project applications are due April 24.

The tenders come as Baghdad faces disputes with both the Kurdistan Regional Government, which wants autonomy to develop the resources in its area, and Iraq’s oil workers, who want limits on foreign participation in the currently nationalized oil sector.

The KRG has signed deals of its own already, over Baghdad’s objections and warnings. The workers have also criticized Iraq’s ministries for not investing more of their own funds instead of relying on foreign investment.

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