ONGC Videsh qualifies for Iraq's oil exploration bidding

ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is among 41 international oil majors who have qualified for Iraq's fourth bidding round for exploration blocks.

Besides OVL, others who have qualified to bid for the 12 exploration blocks due to be awarded in January next year are ExxonMobil, Shell, Total, BP, Chevron and a host of multinational oil companies.

Industry sources said 50 companies had submitted qualification documents for consideration by a June 6 deadline; of these 41 qualified.

The Iraqi oil ministry is planning to hold a roadshow at the end of September with contracts due to be awarded on January 25 or 26.

Sources said OVL had bid for the giant Halfaya oilfield along with state-run Oil India and Turkish Petroelum Corp (TPAO) in Iraq's second post-war bid round in December 2009. It lost the bid for the third largest field on offer in that round to a consortium led by a Chinese firm.

A group led by China National Petroleum Corp bid lower than the $1.76 per barrel fee OVL and partners sought for boosting output from Halfaya field to 550,000 barrels per day.

CNPC, Petroliam Nasional Bhd (Petronas) and Total SA offered to boost production to 535,000 bpd from current 3,000 bpd at a cost of $1.40 a barrel. The Halfaya oilfield has estimated reserves of 4.1 billion barrels of oil.

OVL had, in the first round in June that year, lost the Zubair oilfield when it, along with OAO Gazprom of Russia and TPAO, had asked for a remuneration that was about five times higher than $1.90-2 a barrel that Baghdad was willing to pay.

The Indian firm had also qualified for the third round last year but failed to make the mark.

In the fourth round, Iraq is offering 7 gas fields and 5 oilfields.

Iraq, holder of the world's third-largest oil reserves, is seeking foreign investments to boost output after six years of conflict destroyed its infrastructure.

Bidders must accept service contracts that pay them a flat fee for each barrel extracted, rather than production-sharing agreements in which they gain a stake in the crude produced. A service contract means that they do not benefit from a rise in oil prices.

Sources said the formula for the two bidding parameters -- the dollar-per-barrel remuneration fee and plateau production target -- has been weighted 80 per cent toward the fee, with the aim of dissuading companies from promising unrealistically high output targets.