Iraq will auction off 12 mainly gas exploration blocs during a January 2012 bidding round as the country pushes ahead with efforts to beef up its energy sector, the oil minister said Monday.
The January auction will be Iraq's fourth bidding round on its energy assets since the overthrow of Saddam Hussein in 2003. The country's oil and gas sector is struggling to overcome years of neglect and violence by seeking international investment to exploit its below-ground riches.
Oil Minister Abdul-Karim Elaibi told a news conference in Baghdad that interested companies have until May 19 to prequalify to compete for the 12 blocs. No exact date for the bidding was given.
"We hope that the next bidding round will achieve good results and bigger success than the ones before," said Abdul-Mahdi al-Ameedi, general director of the oil ministry's licensing and contracts department.
Iraqi oil officials said the companies will be paid a flat fee for their services rather than a share in the discovered resources. The officials declined to be identified because they were not authorized to brief the media.
Iraq has awarded 15 oil and gas deals since 2008 to international energy companies in the first major investment in the country's energy industry in more than three decades.
Seven of the exploration blocs are gas and the others are oil fields. Five of the blocs are in Iraq's western Anbar province or shared between Anbar and neighboring provinces; one is in the northern Ninevah province; one is shared between central Diyala province and neighboring Wasit province while the rest are scattered throughout southern Iraq.
The Iraqi oil minister also reiterated his belief that $120 per barrel is an acceptable price for oil and would not affect the global economy.
Elaibi first made the comments back in March when oil was hovering around $102 a barrel. Since then oil prices have climbed to almost $113 a barrel as fighting in Libya has shut down almost all the OPEC member's oil output. The jump in oil prices has been a boon for Iraq, also an OPEC member. Baghdad is almost entirely dependent on the price of oil for revenue and rebuilding its war-damaged economy.
The blocs that will be on offer in January are expected to add about 29 trillion cubic feet of natural gas to the current 126.7 trillion cubic feet in reserves, and about 10 billion barrels of oil to the current 143.1 billion barrels of oil.
Iraq plans to increase daily oil production to 6.5 million barrels by 2014 compared to its current production of 2.75 million barrels per day. Output is projected to climb to 3.3 million barrels per day in 2012 and 4.5 million barrels per day in 2013.