Iraq has awarded Russian oil giant Bashneft rights to explore for oil in the south of the country after nearly one month of negotiations, a senior Baghdad official said on Sunday, bringing the total number of Russian companies with oil deals in Iraq to three.
Bashneft and Vietnam''s PetroVietnam were part of a consortium led by UK''s Premier to bid for Block 12 in Iraq''s fourth energy bidding round in May. The consortium rejected the government''s proposed fee of $5 per barrel of oil equivalent as too low and sought $9.85 for each barrel. The deputy director of the Oil Ministry''s contracts department, Sabah al-Saidi, said that the ministry reached a separate agreement with Bashneft last week after it accepted the $5 fee. The 8,000-square-kilometer (3,100-square-mile) block is in the southern provinces of Muthanna and Najaf.
The May auction was Iraq''s fourth since 2009 and was meant to attract foreign investment in the country''s crucial energy sector, particularly natural gas exploration. It drew lukewarm response from foreign companies due to tough contract terms. Out of 12 exploration blocks were on offer only three were awarded.
Only areas with undetermined hydrocarbon resources were on offer, while previously the rights to known large and medium oil and gas fields were being auctioned off. The three successful bids were made by consortiums led by Kuwait Energy, Russia''s Lukoil and Pakistan Petroleum.