Iraq is set to award on June 29-30 the winners for the right to help the country develop its six oilfields and two natural-gas deposits. More than 30 companies, including eight of the world's top 10 non-state oil producers, like Exxon Mobil and Royal Dutch Shell, are bidding for $16 billion worth of technical service contracts for producing fields. ConocoPhillips, based in Houston, was in talks about preparing joint bids with Russia's OAO Lukoil and other potential partners, chief executive Jim Mulva said. Total, France's largest energy company, will bid for the contracts, the Iraqi prime minister's office said earlier. StatoilHydro ASA, Norway's biggest oil and natural-gas producer, was also preparing a bid, Peter Mellbye, vice president for international exploration and production, said. To supplement income from the contracts, the government is also asking winning bidders to provide a total of $2.6 billion in loans, which will later be repaid. Iraq needs cash to build infrastructure, and the government plans to sell about $5 billion in bonds to help pay for power and water projects. This month it proposed a $70 billion spending plan for housing, agriculture and transport. The government, also running a second bidding round for 11 oil and gas fields, aims to boost production to about 6 million barrels a day by 2015, from 2.4 million barrels in May. Companies investing in Iraq are looking to take a stake in the long-term potential that the country's 115 billion barrels of reserves hold after gaining a foothold through the service contracts for operational fields. Iraq may offer foreign companies direct stakes in deposits and allow them to sign production-sharing agreements for future fields, Oil Minister Hussain Al-Shahristani said. Iraq will earn 100 times more than the foreign companies it hires to develop the deposits, the minister told parliament in Baghdad on Tuesday. The deposits being offered in the first licensing round may yield $1.7 trillion in profit for the country, based on an oil price of $50 a barrel, while oil companies seeking service contracts will gain $16 billion over the 20-year life of the contracts, he said. Al-Shahristani defended government policy in parliament this week, saying foreign investment will raise production and profit while overseas oil companies will get a fee for developing deposits without taking stakes in any fields. Iraq's reserves are so large and so little developed that foreign companies are willing to take the risk, said Tariq Shafiq, an adviser with London-based Petrolog & Associates and a former Iraqi Oil Ministry official who helped write the nation's draft oil law. The country's parliament has not approved the oil law due to disagreements between the government and lawmakers. Iraq may be a more attractive long-term development for international investors since it has produced only about 8 percent of its oil, Shafiq said.
