Arab Today, arab today shell mulls bid in iraq oil auction
Last Updated : GMT 13:40:10
Arab Today, arab today
Arab Today, arab today

Shell mulls bid in Iraq oil auction

Arab Today, arab today

Arab Today, arab today Shell mulls bid in Iraq oil auction

London - Arabstoday

Royal Dutch Shell is weighing making a bid in an Iraqi auction of exploration rights that Baghdad has promised to make more lucrative for foreign investors. In Iraq's last tender, not a single western oil major made a bid, and only three of 12 contracts were ultimately awarded, mostly to smaller independent companies. Last week the Iraqi oil ministry said it was revamping the economic terms for its fifth auction since 2003. "The licence terms have to be attractive and they have to be competitive," said Mark Carne, the executive vice president of Shell for the Middle East and North Africa. "We have to decide where to best use our human resources and our financial capital on a global basis, so we will bid for licences in those places that are competitive and, if they're not competitive, then we will use our resources elsewhere." Iraq is strategically key for Shell, which won a service contract to boost capacity at the Majnoon oilfield in 2009 and in November secured approval for a US$17.2 billion (Dh63.17bn) joint venture to capture gas being flared across southern Iraq. Shell's expansion of its relationship with Baghdad came even as other oil majors such as ExxonMobil and Total were working on deals in the autonomous Kurdistan region, which offers contracts that let companies take an equity share of oil rather than just a per-barrel service fee. The Iraqi oil ministry, which asserts such contracts signed with Erbil are illegal, has blacklisted companies entering Kurdistan and threatened to expel them from projects in southern Iraq. But its promise to make the terms of its fifth auction more attractive signals a willingness to make concessions to foreign companies to compete with Erbil. "Every government, in a way, has the same dilemma," said Mr Carne. "Every government wants to ensure that they get the largest possible slice of the pie for the national resource holder but, at the same time, they have to attract international investment because they need the expertise, technology and skills that international investment can bring." A deadline of the end of the year looms for Shell to boost production at Majnoon to 175,000 barrels per day (bpd) from a first-quarter average of 18,600 bpd, under a deal with the Iraqi oil ministry. In its gas venture with Mitsubishi and the Iraqi government's South Gas Company, by 2017 it hopes to recover all gas being flared. "There's far more gas in south Iraq than can currently be [used for] domestic power demand alone," said Mr Carne. "So the choice that needs to be made by the Iraqis in the longer term as to whether they use the gas for local industralisation and/or for export." That opens possibilities to build new pipelines or export terminals that could supply gas-short countries such as the UAE. From: The National.

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