Page 4 - MEOG Week 09 2023

MEOG COMMENTARY MEOG

Iraq finally finalises fifth

licensing round awards

Deals agreed in 2018 were belatedly signed last week
as Iraq drew its fifth licensing round to a conclusion

IRAQ IRAQ’S Oil Ministry has belatedly signed six bid round would produce 250,000 barrels per
oil and gas contracts that were awarded in the day (bpd) of crude oil and aim to raise national
fifth licensing round (5LR) in 2018. The signings production of free and associated gas by 800mn
WHAT: represent a major step forward for the country’s cubic metres per day.
Six of the 11 blocks were plans to boost domestic energy production,
awarded with Emirati diversify revenue streams and reduce depend- Bid round
and Chinese companies ence on costly and unreliable gas imports from The MoO launched the 11-block licensing
splitting them. Iran. round in late 2017 in an effort to find an alterna-
Prime Minister Mohammed Shia al-Sudani, tive means to capitalise on oil market recovery.
WHY: speaking at the Ministry of Oil’s (MoO) signing The auction, for acreage along the Iranian and
The concessions cover ceremony, congratulated the officials involved Kuwaiti borders, was the first since 2012.
a mixture of oil- and and noted that the deals had been “stalled for However, despite prospective bidders com-
gas-rich targets, and five years”, with the lack of progress on gas-re- plaining from the outset about a lack of clarity
their contracts are lated developments estimated to have cost “Iraq surrounding the terms governing the auction,
substantially different millions of dollars and causing harmful environ- the date for bidding was brought forward from
from those awarded mental damage”. Multiple senior MoO officials June to mid-April 2018 in an attempt to conclude
during previous licensing have since confirmed that the contracts are now the process ahead of elections that were sched-
rounds. final and binding. uled for a month later.
Meanwhile, Deputy Prime Minister On April 13, two days before the bidding was
WHAT NEXT: for Energy Affairs and Oil Minister Hayan due to take place, two contract models were pre-
Iraq’s oil minister has Abdulghani announced that plans were under- sented by the MoO – with blocks offered either
already spoken of plans way for a new licensing round aimed at maxim- for exploration, development and production or
for another licensing ising national gas production. for development and production. The deadline
round which will focus Speaking during the signing ceremony for was extended by a mere 10 days to April 25, with
on free gas as well as the fifth licensing round, Abdulghani empha- the auction eventually held the following day.
oil development from sised the government’s keenness to invest in The new contract terms differ in key respects
underexplored areas. gas and refining industries, noting that the next from the now much-maligned fee-per-barrel

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