Iraq will seek $1.2 billion in non-recoverable signature bonuses in a second round of bidding for oilfield contracts, and will take a quarter stake in the new hydrocarbon projects, Iraqi officials said on Tuesday. The first round of tenders in June disappointed international oil firms after it emerged Iraq wanted to pay them far less than they expected, and the terms so far for the second round, set for December, could also deter.
Most companies, including firms from resource-hungry China and India, eager to get a share of the world's third-largest oil reserves, balked at the lower than expected fees. Only one deal, for Iraq's biggest oilfield - Rumaila in the south - was awarded, to a consortium led by BP. Although Iraq has lowered the signature bonuses for the second round, they will be non-recoverable, unlike the contracts offered in the previous auction in June, in which the signature bonuses were considered soft loans.
Oil Minister Hussain al-Shahristani said the lower signature bonuses were to attract more interest. But the fact the bonuses are no longer loans may be a new deterrent. "Some oil companies told us that the level of the signature bonus in the first bidding round has affected their fees in a very significant way," he said. Bids are judged mainly on the fees each firm asks for its work, expressed in per barrel terms for the oil produced. Contracts are for a maximum of 25 years.
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