Iraq will sign initial contracts in July with three foreign companies that won deals to explore oil and gas blocks as it looks to attract more foreign investment to develop its energy sector following decades of war and economic sanctions. The Opec member is expected to be the world's biggest source of new oil supplies over the next few years after signing contracts with international oil companies and plans to open up more rounds for additional oil and gas blocks for auction.
Abdul-Mahdy al-Ameedi, director of the oil ministry's contracts and licensing directorate said on Friday a date of July 15 had been set to sign a deal with Pakistan Petroleum to explore gas block 8 in Diyala and Wasit provinces in eastern Iraq. Iraq will also sign an initial contract with a consortium led by Kuwait Energy for oil block 9 on July 16 and a deal to explore oil block 10 will be signed with a group led by Russia's Lukoil on July 17, he said. Pakistan Petroleum, Kuwait Energy and Lukoil won their bids in May at Iraq's fourth energy auction, which had a poor showing because of tough contract terms drawn up by Baghdad.
Iraq has offered foreign companies less attractive service agreements - where they are paid a fee - rather than production-sharing deals that allow them to profit jointly from the output. "After signing the initial contracts, we will send them to the cabinet for final approval. After cabinet approves, we will set a date to sign the final contracts," Ameedi said.
Ameedi has said he also expected that an initial deal with Russia's Bashneft, which on Thursday was awarded rights to develop Iraq's oil block 12, would be signed in July. Iraq is slowly getting back on its feet nine years after the US-led invasion that toppled dictator Saddam Hussein and it needs foreign investment in virtually every sector to rebuild its dilapidated infrastructure. It has already signed major deals with oil giants such as BP to develop oilfields in the country.