We will soon find out which corporations have been awarded no bid contracts. If the process is going to truly be competitive, why the no bid contract process? And what will this look like if the big American companies recieve all of the contracts? M

June 30, 2008 -- Updated 1719 GMT (0119 HKT)

Iraq sparks scramble for lucrative oil contractsStory


Highlights

Iraqi oil minister: 35 companies qualified to bid on service contracts for oil fields

New contracts would raise Iraq's production by 1.5 million barrels per day

Reduction in violence has boosted production to highest level since 2003

Reports: 5 companies close to signing short-term oil service contracts no-bid basis

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BAGHDAD, Iraq (CNN) -- Iraq's oil minister Monday opened international bidding on six oil fields that could increase the country's oil production by 1.5 million barrels per day.

Iraqi flags flutter during the opening ceremony of a new oil refinery plant in the Shiite holy city of Najaf.

But the oil ministry continues to negotiate short-term no-bid contracts with several U.S. and European oil companies, including Exxon Mobil Corp., Royal Dutch Shell, Total SA, Chevron Corp., and BP -- a step recently criticized by two U.S. lawmakers.

Oil Minister Hussein Shahrastani announced Monday that 35 international oil companies can bid on long-term contracts for redeveloping the six oil fields, as well as two natural gas fields.

"It is a unique event and a significant feature in the new Iraq that we declare the first bidding course for developing the Iraq oil fields publicly and fully in a transparent way," the minister said at Monday's news conference.

It marks the first time in more than 35 years that Iraq has allowed foreign oil companies to do business inside its borders.

Shahrastani said the fee-based contracts will not give the winning companies a share in the revenue from oil sales "because this wealth belong to Iraq only and thus we will not allow anyone to share the Iraqis' oil."

Iraq has among the largest oil reserves in the world, with an estimated 115 billion barrels -- tying Iran for the No. 2 status behind Saudi Arabia's 264 billion barrels, according to estimates from the Energy Information Administration.

Iraq's current oil production is 2.25 million barrels a day, according to the U.S. Energy Information Administration. That is close to its status before the U.S.-led war that toppled Saddam Hussein in 2003, but below its levels prior to the first Persian Gulf War in 1991.

The six oil fields that will be open to development are in the Kirkuk oil fields and the neighboring Bai Hassan fields in northern Iraq, Shahrastani said. They are al-Rumeila, al-Zubair, al-Qurna West, and three fields in the Maysan oil fields -- Bazirqan, Abu Gharab and Fakah.

The two gas fields are Akas and Mansouriya gas fields in western Iraq.

The fields have already been explored and are producing oil and gas, but the equipment is old and outdated, Shahrastani said. He hopes that the new infrastructure provided by the international oil companies will mean "the production can be increased in less cost and less time."

Iraq's oil minister said the ministry will invite the 35 qualified international companies --- which includes BP, Exxon Mobil, Royal Dutch Shell and Chevron -- to prepare their bids over the next two weeks. The contracts could go into effect by next year, but Shahrastani said it will take several more years before oil production is increased.

"We hope in 2013 through this first bidding course to increase production in these fields by 1.5 million barrels per day, in addition to our daily average production rate during the last five years," he said.

Meanwhile, Iraq hopes to wrap up its talks regarding short-term, no-bid contracts that would allow the U.S. and European oil companies -- including Exxon Mobil, Royal Dutch Shell, Total SA, Chevron, and BP -- to service those oil fields as soon as possible.

Go to this link to read the entire story:
Iraq sparks scramble for lucrative oil contracts - CNN.com

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Its actually good news for the Iraqi people, more oil, better processing, and more profit to the governemnt from increased efficiency to be used for aid/repairs.

The no-bid contracts are short term (less that 2 years), and were mutually agreed upon to boost the Iraqi economy.

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I just read an article that suggests the negotiations on these contracts has reached a near impasse on the issue of Iraqis wanting to simply pay companies and time limit contracts vs the companies wanting a share of oil revenues. What the US corporations want is atypical of mideast contracts. Iraqis have a long history of seeing their oil fields exploited by foreign corporations, starting with the British.

If there is any fairness in the process, we may see Dutch Petroleum end up with contracts, as they have already done in Iran. There is no bad history between the Netherlands and the mideast.

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