By Stephen Jewkes
RAVENNA, Italy, March 20 (Reuters) - OPEC member Iraq’s fifth licensing round for oil exploration will be held in the next few months and will come from 10 oil blocks, its oil minister said on Wednesday.
Iraq, which has some of the world’s largest oil reserves, is pushing hard to develop the industry, shattered by years of war and instability.
“In the next few months there will be the fifth licensing round,” Iraqi oil Minister Abdul Kareem Luaibi said at an industry conference in Italy.
Luaibi also said the country’s cabinet energy committee had approved an initial agreement with oil major BP to upgrade the Kirkuk oil field.
“It has been approved. Negotiations can now continue,” he told Reuters.
Iraq revealed a preliminary agreement with BP in January to revive the giant but ageing northern Kirkuk oil field which is suffering massive output declines.
Iraq’s fourth energy auction ended last year with few foreign investors tendering bids.
This could force Baghdad to ease tough contract terms to lure more oil explorers into a new bidding round that should focus on gas, while the oil will be used to boost reserves.
“In previous contract awards no importance was given to gas. We have now started a major project to develop gas,” Luaibi said.
Baghdad’s less attractive service contracts combined with a recent boom in natural gas supplies and gas finds elsewhere in the world may have further quashed investor interest in a tricky gas prospect like Iraq.
Violence in Iraq has eased since the height of the war, though security remains a concern, especially in more remote areas where some of the auctioned gas blocks are located.
Companies entering new deals also weighed risks from Iraq’s continued political instability against the potential gas and crude developments on offer in the bidding, which are mostly in western and central Iraq.
“There will be amended contracts that will be very alluring for the IOCs,” Luaibi said, referring to the new licensing round.
At the Ravenna meeting Luaibi had a one-to-one meeting with Paolo Scaroni, the chief executive of Italian major Eni which operates the Zubair oil field near Basra. Both men declined to comment on the meeting.
A group led by Eni is in final talks with Iraq to cut the production target of Zubair oilfield to 1 million barrels per day (bpd) from 1.2 million bpd, head of the state-run South Oil Co. told Reuters in January.
Scaroni said the group was not in talks to find another partner to help develop its Zubair field.
Eni, U.S.-based Occidental Petroleum Corp and South Korea’s KOGAS signed a 20-year deal with Iraq in 2010 to develop Zubair, whose production is currently at around 270,000 barrels per day.
The consortium is expecting to invest $18 billion in the Zubair oilfield.