Angola’s Sonangol wins two Iraqi oil fields

BAGHDAD – Sonangol, Angola’s state petroleum company, won a deal to develop Iraq’s Najmah and Qayara oil fields, Oil Minister Hussain al-Shahristani said, in the country’s second bidding round since the 2003 U.S. invasion.

The company’s plateau production target for the field in the volatile province of Nineveh is 110 000 barrels per day (bpd), and the remuneration fee is US$6 per barrel.Sonangol had proposed a per-barrel fee of US$8.50, but then accepted the Oil Ministry’s lower amount.Iraq, emerging from the shadow of war, expects to boost its oil output to rival the level of top producer Saudi Arabia after awarding some of its most attractive oilfields to global oil companies last week.By the end on Saturday of a two-day bidding round for 10 oil contracts – the second auction since the 2003 US invasion – Iraq had received pledges from oil firms to boost its output by 4,765 million barrels per day, almost double its current output.If all deals from a first auction in June, the second this weekend and others being negotiated are added to national production, Iraq will have a capacity of 12 million barrels per day, overtaking Russia and challenging Saudi Arabia’s 12,5 million bpd, Oil Minister Hussain al-Shahristani said.’This second round marked a major success for the Iraqi government and the Oil Ministry,’ government spokesman Ali al-Dabbagh told Reuters. Some 30 international oil companies braved the threat of violence and attacks to come to Iraq, putting aside security concerns just days after car bombs killed 112 people in Baghdad.Oil majors from the United States appeared conspicuously uninterested in the fields on offer in the second round, confounding expectations that they might end up with the lion’s share of Iraq’s oil sector as a result of the U.S.-led war.Amid fierce competition, a group led by Russian energy giant Lukoil won a deal to develop the West Qurna Phase Two oilfield, which with 12,9 billion barrels of reserves is one of the world’s largest untapped ‘supergiant’ fields. Supergiants are fields of 5 billion barrels or more.On the first day of the auction on Friday, the 12,6 billion barrel supergiant Majnoon field went to a partnership of Royal Dutch Shell and Malaysia’s Petronas.The Russian company’s win of West Qurna is made sweeter by the fact it had lobbied unsuccessfully since the 2003 US invasion to revive a Saddam Hussein-era contract for the field. Only two of the five fields on offer on Friday were initially awarded as oil firms steered clear of more dangerous or troublesome areas, including the supergiant East Baghdad oilfield that lies in part under Baghdad’s Sadr City slum and fields in the north where violence is still rife.The Qayara field in the north near the violent city of Mosul, which was not awarded on Friday, was won by Angolan state-oil firm Sonangol on Saturday after the company changed its mind about accepting the government’s proposed $5 per barrel fee. Sonangol had wanted more than twice that. Sonangol on Saturday also won another northern field, Najmah, after accepting a lower fee than it wanted.But for other fields, the companies actually asked for less than the government was willing to pay. Royal Dutch Shell and Malaysia’s Petronas won Majnoon with a proposed a fee of US$1,39 per barrel and pledging to increase output to 1,8 million bpd, more than double what Iraq expected. Halfaya, with 4,1 billion barrels of reserves, was some consolation. CNPC, Total and Petronas won it with a fee of US$1,40 per barrel and a plateau production target of 535 000 bpd.The Lukoil and Statoil partnership for West Qurna Phase Two proposed a fee per barrel of US$1,15 and a plateau production level of 1,8 million bpd.The smaller Gharaf field was won by Malaysia’s Petronas and Japanese oil company Japex, with a fee of US$1,49 per barrel and plateau output target of 230 000 bpd. Other winners were a group led by Russia’s Gazprom for a deal to develop the Badrah oilfield. The group agreed to a US$5,50 per barrel fee and a production target of 170 000 bpd. – Nampa-Reuters

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