< Back to Iraqi Dinar in the News May 23rd, 2007

Iraq to auction oil, gas blocks once law passed

NEW DELHI, May 23 (Reuters) - Iraq will auction 15 onshore oil and gas assets once its new hydrocarbons law is passed, a top oil ministry official said on Wednesday in India during a visit to drum up Indian interest in building new refineries.

"Iraq is preparing 15 fields and blocks for first round of auction after approval of the oil and gas law...tenders are under preparation," Fayadh Hassan Nima, director general at Iraq's oil ministry, told reporters.

Oil multinationals are waiting until the new hydrocarbon law, which will set rules for investment in Iraq, is passed by parliament before committing cash to the country.

International companies are eyeing its giant and largely underdeveloped oilfields.

Nima said he expected the law to be finalised within "two to three months".

Iraqi Oil Minister Hussain al-Shahristani said earlier this month all parties had agreed to pass the law by the end of May.

The legislation is crucial to regulating how wealth from the oil is shared out by its sectarian and ethnic groups. It has faced last-minute disagreements from Kurds in the oil-rich north of the country, who say they are not getting their fair share.

Oil is the main source of the hard currency needed to rebuild Iraq's economy and the energy sector is struggling to recover from years of mismanagement and sanctions.

Nima said Iraq's current oil production capacity was 3 million barrels per day but it was producing 2 million bpd. In the next four years it plans to ramp up oil production to 4.5 million bpd and to 6 million bpd by 2016, he said.

India and Iraq will begin talks on Thursday on resuming work at an exploration block awarded to India's Oil and Natural Gas Corp. (ONGC) in 2001, where force majeure was declared following the U.S. invasion of Iraq, Nima said.

"We are ready to start negotiations and start work. We are inviting them to come and see what is going on. Tomorrow we will start negotiations about plan of work," he said.

ONGC has a 100 percent participating interest in the onshore exploration Block 8.

NEW REFINERIES

Baghdad wants to build at least four new refineries to help it solve chronic fuel shortages and double its refining capacity to 1.5 million bpd in the next 10 years, Nima said.

It plans to build the 140,000 bpd Nahrain refinery, just south of Baghdad and the 70,000 bpd Kuya refinery in the north, as well as refineries of 100,000 bpd each at Kirkuk and at Missan near Amara.

Iraq has invited India to build the refineries at Kirkuk and Missan, Nima said.

Baghdad also plans to double the capacity of Daura refinery to 200,000 bpd, Basra from 100,000 bpd to 210,000 bpd and install new units, including a 30,000 bpd fluid catalytic cracker at Baiji refinery to upgrade the quality of products and enhance gasoline production, he said.

It will also build a refinery in Nassiriya, in the south of Iraq, for exports with a capacity of 300,000 bpd.

Iraq has eight oil refineries, none of which were damaged during the invasion. Oil officials say that the plants are operating at only 50 percent-75 percent of capacity, forcing Baghdad to import most of its fuel.