Iraq’s oil and gas development contracts may draw 14 bidders

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Iraq’s oil and gas development contracts may draw 14 bidders

CULVER CITY, CA - APRIL 25: Oil rigs extract petroleum as the price of crude oil rises to nearly $120 per barrel, prompting oil companies to reopen numerous wells across the nation that were considered tapped out and unprofitable decades ago when oil sold for one-fifth the price or less, on April 25, 2008 in the Los Angeles area community of Culver City, California. Many of the old unprofitable wells, known as "stripper wells", are located in urban areas where home owners are often outraged by the noise, smell, and possible environmental hazards associated with living so close to renewed oil drilling. Since homeowners usually do not own the mineral rights under their land, oil firms can drill at an angle to go under homes regardless of the desires of residents. Using expensive new technology and drilling techniques, California producers have reversed a long decline of about 5 percent annually with an increased crude flow of about 2 1/2 million barrels in 2007 for the first time in years. (Photo by David McNew/Getty Images)

BAGHDAD: Fourteen companies have expressed interest in oil and natural gas exploration and development contracts to be auctioned by Iraq on April 25, the oil ministry in Baghdad said.

The 14 have bought a package containing the bidding documents and terms of the contracts for the 11 exploration blocks to be auctioned, it said in a statement.

The blocks, located in border areas with Iran and Kuwait, and in offshore Gulf waters, were to be auctioned in June.

That date was brought forward to April 15 and then postponed to April 25 to give bidders more time.

The oil ministry last month announced measures to reduce the fees paid to oil companies in the contracts to be auctioned.

The new contracts will exclude oil by-products from the companies’ revenue, establish a link between prevailing oil prices and their remuneration, and introduce a royalty element.

Oil companies operating in Iraq currently receive a fee from the government linked to production increases, which include crude and oil by-products such as liquefied petroleum gas.

OPEC’s second-largest producer after Saudi Arabia, Iraq decided to change the contracts after a glut caused oil prices to crash in 2014, reducing Baghdad’s ability to pay such fees.

Companies including BP, Exxon Mobil, Eni , Total, Royal Dutch Shell and Lukoil have helped Iraq expand production in the past decade by over 2.

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