Asian companies new players in Iraq's oil industry
Sunday, 12 April 2009
LONDON, Apr 11 (AFP): The predominance of Asian operators among bidders for a chunk of Iraq's vast oilfields shows the rising power of small and flexible state-run companies prepared to take risks, analysts say.
The latest bidding round, the second since the 2003 US-led invasion of Iraq, covers 11 gas and oilfields, including the massive West Qurna field where reserves are believed to extend to some 20 billion barrels of oil.
"Asian companies are more aggressive, prepared to take more risks," said Manoucher Takin of the Centre for Global Energy Studies (CGES). "It has been the classic thing for the last few years."
The shortlisted bidders are mainly national oil companies, including five from Asia.
They are JOGMEC of Japan, Kazakhstan's KazMunaiGas Exploration Production (KMG-EP), Oil India, Pakistan Petroleum and PetroVietnam, according to the Iraqi oil ministry.
From Europe, Russian concerns Rosneft and Tatneft and Britain's Cairn Energy are pitching for business, while Angola's Sonangol represent Africa.
The companies will be invited to take part in a second round of bidding.
The development of the fields could help boost Iraqi oil production by up to 2.5 million barrels per day, Oil Minister Hussein al-Shahristani has said.
Francis Perrin, editorial manager of the review Arab Oil and Gas, said the list "reflects the growing power of Asian national oil companies in recent years, both in the bidding rounds and bilateral agreements."
Samuel Ciszuk, Middle East analyst at the London-based IHS Global Insight, said it was important to recall that the nine companies "are in addition to those already pre-qualified" for the first bidding round.
In June last year, 35 oil companies including the biggest players such as Chevron, BP and Total, were pre-selected before a contract had even been signed.
That first round of bidding was only open to companies which had already operated giant oilfields, a condition which left many smaller concerns on the sidelines.
The bar was set considerably lower for the second bidding round, allowing in the kind of second-tier operators who, in some cases, have never operated outside their own countries.
Analysts said the entry of the new players into the market could also help the Iraqi government to limit the power of the big, private firms, or International Oil Companies (IOCs).
Ehsan Ul-Haq, head of research at JBC Energy in Vienna, said the Iraqi authorities "will not allow IOCs to get a bigger part of the cake".
The entry into the Iraqi market of smaller players which can react quicker than their bigger rivals could also push the big boys to drop their resistance to Iraqi-set conditions and sign contracts.
"These smaller companies, especially NOCs, which are driven very much by political motivations rather than the highest possible margin, can put additional pressure on the IOCs to agree," said Ciszuk of IHS Global Insight.
Takin of CGES said the tone was set when the first contract inked after the fall of Saddam Hussein was with the state-run China National Petroleum Corp (CNPC).
The latest bidding round, the second since the 2003 US-led invasion of Iraq, covers 11 gas and oilfields, including the massive West Qurna field where reserves are believed to extend to some 20 billion barrels of oil.
"Asian companies are more aggressive, prepared to take more risks," said Manoucher Takin of the Centre for Global Energy Studies (CGES). "It has been the classic thing for the last few years."
The shortlisted bidders are mainly national oil companies, including five from Asia.
They are JOGMEC of Japan, Kazakhstan's KazMunaiGas Exploration Production (KMG-EP), Oil India, Pakistan Petroleum and PetroVietnam, according to the Iraqi oil ministry.
From Europe, Russian concerns Rosneft and Tatneft and Britain's Cairn Energy are pitching for business, while Angola's Sonangol represent Africa.
The companies will be invited to take part in a second round of bidding.
The development of the fields could help boost Iraqi oil production by up to 2.5 million barrels per day, Oil Minister Hussein al-Shahristani has said.
Francis Perrin, editorial manager of the review Arab Oil and Gas, said the list "reflects the growing power of Asian national oil companies in recent years, both in the bidding rounds and bilateral agreements."
Samuel Ciszuk, Middle East analyst at the London-based IHS Global Insight, said it was important to recall that the nine companies "are in addition to those already pre-qualified" for the first bidding round.
In June last year, 35 oil companies including the biggest players such as Chevron, BP and Total, were pre-selected before a contract had even been signed.
That first round of bidding was only open to companies which had already operated giant oilfields, a condition which left many smaller concerns on the sidelines.
The bar was set considerably lower for the second bidding round, allowing in the kind of second-tier operators who, in some cases, have never operated outside their own countries.
Analysts said the entry of the new players into the market could also help the Iraqi government to limit the power of the big, private firms, or International Oil Companies (IOCs).
Ehsan Ul-Haq, head of research at JBC Energy in Vienna, said the Iraqi authorities "will not allow IOCs to get a bigger part of the cake".
The entry into the Iraqi market of smaller players which can react quicker than their bigger rivals could also push the big boys to drop their resistance to Iraqi-set conditions and sign contracts.
"These smaller companies, especially NOCs, which are driven very much by political motivations rather than the highest possible margin, can put additional pressure on the IOCs to agree," said Ciszuk of IHS Global Insight.
Takin of CGES said the tone was set when the first contract inked after the fall of Saddam Hussein was with the state-run China National Petroleum Corp (CNPC).