The Iraq Oil Ministry Wednesday touted the results of its natural gas licensing round, after it named winning bidders for all three projects offered and garnered competitive contests for two of the three projects.
The Iraq Oil Ministry Wednesday touted the results of its natural gas licensing round, after it named winning bidders for all three projects offered and garnered competitive contests for two of the three projects.

"It went very well and we are happy about its results," said Thamer al-Ghadhban, the top energy advisor to Iraq 's Prime Minister Nouri al-Maliki.

The three natural gas fields - Akkas, Siba and Mansouriya - were won by energy consortia led by respectively, Korea Gas Corp. (036460.SE), or KOGAS, Kuwait Energy and Turkish Petroleum International Co., or TPAO.

However, the Iraqi natural gas bidding didn't draw anywhere near the same fierce competition as the two previous petroleum rounds held respectively in July and December last year.

The Akkas and Siba fields each drew a competing from another consortium, giving the ministry the luxury of picking the bidder who offered to produce at a lower remuneration fee. In the case of Mansouriya, for which the TPAO bid was the sole offer, the Iraqis were able to persuade TPAO to lower its fee from $10 a barrel to $7 a barrel.

The result was a marked improvement in interest from the previous petroleum leasing round in June 2009, when Mansoriya drew no bids and Akkas attracted just one bid that was rejected by the ministry as the bidder submitted a much higher remuneration fee that the one set by the oil ministry.

Some 13 international companies registered for the auction including Russia 's TNK-BP , Italy 's Eni and Norway 's Statoil, but only five submit bids.

The three fields have estimated combined proven reserves of 11.2 trillion cubic feet, about 10% of Iraq's total 112 trillion cubic feet of proven natural gas reserves, the world's 11th largest.

Gas fields are less sought-after than the oil fields because the process of gas extracting is more difficult than that of the oil, with crude being easier to market and transport, according to petroleum industry analysts.

KOGAS and KazMuniaGas, who bid against a consortium of Total SA (TOT) and TPAO, set a remuneration fee of $5.50 a barrel of oil equivalent for Akkas and proposed a production plateau target of 400 million standard cubic feet a day. South Korea 's government in a statement said total investment in the project would reach $4.4 billion.

Kuwait Energy in partner with TPAO proposed a remuneration fee of $7.50 a barrel of oil equivalent for Siba and its plateau output target was 100 million cubic feet a day of gas. TPAO said the group would invest $1 billion in the project.

TPAO and its partner Kuwait Energy won Mansouriya gas field in the restive Dialya governorate with estimated proven reserves of 4.5 trillion cubic feet after the group agreed to lower its fee from $10 a barrel to $7 a barrel.

Of the three gas fields awarded, two in particular - Akkas and Mansouriya - lie in provinces in which insurgent violence has run high.

"We have some security concerns, but we will solve that through cooperation with the provincial and central governments," said Young-Sung Park , a KOGAS vice-president.

Siba project is the first large Kuwaiti investment in Iraq after the two Arab countries became enemies following Saddam Hussein's invasion of the tiny emirate in 1990. "We hope that our work (in Siba field) will help to bring the Iraqi-Kuwaiti relationship back to where it used to be," Mansour Aboukhamseen, chairman of Kuwait Energy said.

Iraq, which this month raised its figure for proven oil reserves by nearly a quarter to 143.1 billion barrels - the world's third largest, aims to use its three fields to fuel its power stations, generating much needed electricity.

The prime minister's advisor, Thamer Al- Ghadhban, said on the sideline of the auction, that his country wouldn't rule out exporting gas once domestic needs, which he put at 5 billion cubic feet a day, were met.

"One of the options is that we can export the gas through Syria ," said Young-Sung Park whose company won Akkas field near the Syrian border.

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