Iraq says more 'superfields' up for grabs

Energy Daily ^ | 12/31/2009 | Staff Writers via Energy Daily

[ErnstStavroBlofeld]

The preliminary deals signed by Angola's state oil company, Sonangol, Wednesday to develop two small fields in the most dangerous part of Iraq constituted a major breakthrough for Baghdad's high-risk drive to attract international oil companies to help it restore its flagging fortunes and transform the global energy market. Over the next 20 years Sonangol will develop the Qayara and Najmah fields, which between them contain an estimated 1.66 billion barrels of oil, in Nineveh province, where al-Qaida and other Sunni insurgents operate.

But the Oil Ministry will pay the company $5-$6 for every barrel its produces. That's three times higher than the fees awarded bigger companies that shunned the high-risk zones for the bigger, but safer, fields in the central and southern regions in a recent auction.

But it was well below what the Algerian outfit had initially demanded, between $8.50 and $12.50 a barrel, underlining Baghdad's reluctance to make concessions even on the riskiest projects.

Undeterred by the rising spiral of sectarian violence as parliamentary elections loom, Oil Minister Hussain al-Shahristani says Baghdad still has scores of oil fields, including the so-called superfields that contain more than 5 billion barrels, to offer foreign companies.

He believes that the bloodletting, including a recent wave of suicide bombings that killed some 500 people, will not undermine his plans to quadruple Iraq's oil production to 12 million barrels a day in the next six years.

He pointed to the string of recent 20-year drilling deals with two dozen oil majors from around the world.

"The terrorists tried to send a message to the companies through the bombings Â… that Iraq is unstable and investment will be overshadowed by risks," he told state television a few days ago