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Iraq’s Fifth Licensing Round

By Alessandro Bacci.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Ministry of Oil has repeatedly said that it would like to renegotiate the terms of its service contracts with the international oil companies (IOCs) to link the fees the companies receive for developing the fields to the oil prices and to have them share the burden when oil prices decrease.

However, discussions between the federal government and the IOCs have been going on for the past two years with no tangible results until now. Companies affirm that they have submitted some recommendations, but then the process has not moved on.

At this point, it seems that to have a successful fifth licensing round, the federal government must produce in the coming months a new model contract (or at least an amended version of the present technical service contracts) capable of satisfying according to different price levels both the government and the IOCs.

Otherwise, it’s difficult for Iraq to reach the production target of 6 million bpd of crude oil by 2020, especially if other neighboring countries might soon offer better contractual terms.

Please click here to download the full report.

Alessandro Bacci is an independent energy consultant in relation to business strategy and corporate diplomacy (policy, government, and public affairs). Much of his activity is linked to the MENA region, an area where he lived for four years. Alessandro is now based in London, United Kingdom (www.alessandrobacci.com). A multilingual professional, Alessandro holds a Bachelor of Laws and Master of Laws from the University of Florence (Italy), a Master in Public Affairs from Sciences Po (France), and a Master in Public Policy from the Lee Kuan Yew School of Public Policy (Singapore).    

Posted on

Iraq’s Fifth Licensing Round

By Alessandro Bacci.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Ministry of Oil has repeatedly said that it would like to renegotiate the terms of its service contracts with the international oil companies (IOCs) to link the fees the companies receive for developing the fields to the oil prices and to have them share the burden when oil prices decrease.

However, discussions between the federal government and the IOCs have been going on for the past two years with no tangible results until now. Companies affirm that they have submitted some recommendations, but then the process has not moved on.

At this point, it seems that to have a successful fifth licensing round, the federal government must produce in the coming months a new model contract (or at least an amended version of the present technical service contracts) capable of satisfying according to different price levels both the government and the IOCs.

Otherwise, it’s difficult for Iraq to reach the production target of 6 million bpd of crude oil by 2020, especially if other neighboring countries might soon offer better contractual terms.

Please click here to download the full report.

Alessandro Bacci is an independent energy consultant in relation to business strategy and corporate diplomacy (policy, government, and public affairs). Much of his activity is linked to the MENA region, an area where he lived for four years. Alessandro is now based in London, United Kingdom (www.alessandrobacci.com). A multilingual professional, Alessandro holds a Bachelor of Laws and Master of Laws from the University of Florence (Italy), a Master in Public Affairs from Sciences Po (France), and a Master in Public Policy from the Lee Kuan Yew School of Public Policy (Singapore).    

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Saudi, Iraq sign 18 Major Energy Deals

By John Lee.

Saudi Arabian companies have signed 18 agreements with the Iraqi government to jointly develop several key projects in the energy sector.

The statement from the Iraqi Oil Ministry gave little detail, but quotes the Saudi Minister of Energy Khalid Al-Falih as saying that Saudi companies are keen to develop relations with Iraq, adding that several important Saudi companies will open their branches in Iraq to “achieve more bilateral cooperation and expand the size of investments in the sectors of oil, gas, industry, importing, infrastructure and [other sectors].”

According to Reuters, both petrochemical giant Saudi Basic Industries Corp (SABIC) and Saudi Arabia’s Industrialization & Energy Services Co (TAQA) are planning to open offices in Iraq.

(Sources: Iraqi Oil Ministry, Reuters)

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Will Iraqi-Saudi Rapprochement Undermine Iran’s Role in Iraq?

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News. 

Iraqi-Saudi relations have witnessed significant improvement after years of boycott that had worsened during Nouri al-Maliki’s rule between 2006 and 2014. On Oct. 22, the establishment of a Coordination Council between the two countries was announced.

Iran, which is seeking to expand its influence in Iraq, might not like this rapprochement, especially following the latest meeting between Iraqi Prime Minister Haider al-Abadi and Saudi King Salman bin Abdul-Aziz Al Saud that took place with US blessing when US Secretary of State Rex Tillerson attended the launching of the Coordination Council.

Former Iraqi Ambassador to the US Lukman Faily told Al-Monitor, “Over the past years, the US attempted to take serious steps to mend ties between Iraq and Saudi Arabia. With this development, the region’s geopolitics will change.”

Saudi newspaper Asharq al-Awsat reported that the Iraqi-Saudi rapprochement will “curb the appetite of the parties that cause stability,” in a clear reference to Iran, which Saudi Arabia always accuses of “destabilizing the situation in the region.”

The results of the US-brokered Iraqi-Saudi rapprochement started appearing when Tillerson asked Iranian militias to leave Iraq, saying that the Iraqi-Saudi rapprochement will “counter some of the unproductive influences of Iran inside of Iraq.”

Hashem al-Haboubi, the deputy secretary general of the Iraqi National Accord movement spearheaded by Iraqi Vice President Ayad Allawi, told Asharq al-Awsat that the Iraqi-Saudi rapprochement might help Iraq break free from Iranian control.

The Iraqi-Saudi rapprochement does not include the Iraqi state in its explicit form only, but also expands to political parties that are at odds with Iran such as the Sadrist movement led by Muqtada al-Sadr, who visited Saudi Arabia and the United Arab Emirates two months ago and headed to Jordan recently to visit King Abdullah.