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Baghdad signs oil deal with 3-nation grouping
By John Reed in Baghdad
Published: December 23 2004 22:00 | Last updated: December 23 2004 18:56

Iraq has awarded its first post-war oil contract to a Turkish-British-Iraqi consortium and plans to sign four more deals by early next year, a senior Iraqi oil official said on Thursday.


Under the $136m (€101m, £71m) deal, Avrasya, a Turkish engineering company, will lead a project to develop the Khurmala Dome, an extension of the Kirkuk oilfield in northern Iraq, Ahmed Al-Shamaa, undersecretary for oil, said.

Three bidders for the tender to develop Hemrin, another northern field, will be asked for final offers soon in a second deal.

Mr al-Shamaa said he received a recommendation on Thursday to proceed with the Khurmala contract from a cabinet oil and gas body formed in July to give Iraq's interim government tighter control over the country's biggest industry.

The Khurmala contract provides for the supply of surface equipment and material to develop the field; supervision of construction; and assistance during commissioning.

Avrasya and Kar, an Iraqi construction company, are joint-venture partners. Dynamic Processing Solutions, based the UK, will participate through an engineering contract, the company confirmed.

Mr al-Shamaa said Iraq's government had decided to re-establish contact with the three bidders for the Hemrin field, as the first two offers were close in price. "We are giving them a chance to give their last price," he said. "We have asked them to give us an answer by the end of the year."

He declined to name the bidders, but an industry source identified them as Canada's Ironhorse Oil & Gas, Nasdaq-listed Ivanhoe Energy and Irish- and London-listed Petrel Resources.

The tender to supply engineering materials and oil and equipment for Hemrin will be worth about $180m.

Word that Iraq is reopening talks with the three companies could boost Petrel, whose shares dived earlier this month after a report that IOG had won the deal.

Iraq's oil reserves are second only to Saudi Arabia's, but the sector's rehabilitation has been plagued by security problems, including insurgent attacks on its main pipeline and other installations.

Mr al-Shamaa conceded that conditions for negotiating the first two deals, which were delayed, were "not perfect" due to difficulties in arranging meetings.

Negotiations took place in Jordan, lasting from October until earlier this month.

Iraq's oil ministry plans to make recommendations on bids for three other projects in southern Iraq by the end of this year, Mr al-Shamaa said.

The tenders to develop the Zubair and Suba-Luhais fields and a refining project in Basra had drawn five, six, and four bids respectively.


"MERRY CHRISTMAS ALL"