KUWAIT/BAGHDAD, Oct 20, (Agencies): Kuwait Energy Company, one of the fastest growing independent oil and gas companies in the Middle East, announced today that it has been awarded 20 year term gas development contracts for Siba and Mansuriya gas fields in Iraq’s third bidding round.
Siba field is located in Basra Governorate and Mansuriya field in Diyala province.
Kuwait Energy jointly bid with the Turkish Petroleum Corporation (TPAO), the national oil company of Turkey for both gas fields. Kuwait Energy will be the operator of Siba, participating with a 60% contractor share and TPAO participating with 40%. TPAO will be the operator of Mansuriya, participating with a 50% contractor share, Kuwait Energy 30% and Korea Gas Corporation (KOGAS) 20%.
The bids were judged on a remuneration fee in US dollars per barrel of oil equivalent (boe) and a plateau production target expressed in millions of standard cubic feet per day (MMSCFD) of dry gas. The successful remuneration fee for Siba was USD7.50 per boe with a plateau production target of 100 MMSCFD. For Mansuriya the successful bid was USD7.00 per boe with a plateau production target of 320 MMSCFD.

Kuwait Energy Chairman and Managing Director, Dr. Manssour Aboukhamseen, said: “We are excited to start today a long-term partnership with Iraq for the development of their natural gas resources and look forward to applying our experience and technology towards building gas production in Iraq that meets domestic needs and export opportunities. Kuwait Energy has been working towards obtaining such contracts for over three years, and today marks a significant milestone for Kuwait Energy.”
Thirteen companies participated in the bidding round for the three gas fields, Akkas, Siba and Mansuriya. The fields together have estimated reserves in excess of 11 trillion cubic feet of gas.
A South Korean-led consortium walked away with the biggest prize Wednesday in Iraq’s third energy auction since Saddam Hussein’s ouster, while a Kuwaiti company nabbed a gas field along its border with its larger neighbor in a win as politically symbolic as it was a business coup.
Iraq had offered up three gas fields holding about 10 percent of its proven gas reserves. The auction was seen as key to helping the OPEC member revamp its dilapidated energy sector and boost gas supplies sorely needed to fuel its reconstruction.

Korea Gas Corp., or KOGAS, and Kazakhstan’s KazMunaiGas EP JSC beat out a consortium grouping France’s Total SA and the Turkish Petroleum International Co., or TPAO, for the 5.6 trillion foot Akkas gas field in western Iraq, the largest of the three fields offered during the licensing round.
Iraq, which sits atop the world’s third largest proven reserves of crude, has already opened up its coveted oil fields to international firms in two licensing rounds last year that attracted a strong turnout.
The country relies on oil for over 90 percent of its foreign revenues and desperately needs cash to rebuild after the 2003 US-led invasion and the earlier decades of sanctions, war and neglect.
In stark contrast to the oil auctions, interest by foreign companies in the gas fields had appeared muted.
Ahead of Wednesday’s licensing round, only 13 of the 45 firms that pre-qualified for the event paid a participation fee. Only five companies submitted bids for the fields, a showing that will likely disappoint Iraqi oil officials.
Opening the auction, Oil Minister Hussain al-Shahristani sought to assure the companies they would have the government’s full backing in developing the projects.

Challenges
He noted the technical and logistical challenges in boosting Iraq’s oil and gas production, but said, “we are committed (to providing) all the support and help to the winning companies today, and we assure them that they will enjoy all the kinds of cooperation we are providing the oil companies that won contracts in the previous two bidding rounds.”
Reflecting the companies’ unease, only one bid was submitted for the second largest field on offer.
Turkey’s TPAO teamed up with Kuwait Energy and KOGAS to offer $10 per barrel of oil equivalent for the 4.5 trillion foot Mansouriya field in the restive province of Diyala.
Iraq, however, rejected that offer and the companies requested a brief delay to evaluate the country’s counteroffer of $7 per barrel of oil equivalent before accepting.
Akkas was the main prize of the auction.

The field is located in the deserts near the Syrian border in Anbar, an overwhelmingly Sunni province and former insurgent stronghold. It was offered in one of the earlier oil auctions, but not awarded, since most foreign firms were reluctant to stake claims to fields in the more volatile parts of the country.
The KOGAS-led consortium offered $5.50 per barrel of oil equivalent produced, with plateau output projected at 400 million cubic feet per day. France’s Total and TPAO had wanted $19 per barrel of oil equivalent, with peak production targeted at 375 million cubic feet per day.
But in a window into the challenges they face, hundreds of people demonstrated in Ramadi, Anbar’s capital, against the Oil Ministry’s plan for developing Akkas. The demonstrators argued that the local government was not consulted and demanded that the winning bidders hire workers solely from the province.

Sunnis, a minority in Iraq, have been at the heart of the fight against the U.S-backed central government in Baghdad, arguing that they are being marginalized by the country’s Shiite leadership.
Security in Iraq, or the lack thereof, has been a major factor restricting the country’s efforts to rebuild and attract investment since Saddam’s fall.
The withdrawal of US forces in August has hiked concerns whether Iraq’s security forces are up to the task amid persisting sectarian tensions. The political process remains fragmented, with no government yet in place after the March elections.
As in earlier bidding rounds, the companies were vying for 20-year service contracts that offer them a fixed fee for their services. The contracts, which can be extended for five years, are a stark contrast to the more lucrative production-sharing contracts most companies prefer.

Also:
BAGHDAD: Gas exports from the three fields auctioned off to international companies by Iraq on Wednesday could be possible in the future once domestic needs are satisfied, a senior adviser to the prime minister said.
“There is no doubt it was a very successful auction,” Thamir al-Ghadhban, a top adviser to Prime Minister Nuri al-Maliki, told Reuters. “They (the fields) will supply 800 million cubic feet per day of gas which we definitely need for power generation and as feedstock for industrial plants.”
Asked about possible gas exports, Ghadhban said, “There is no problem with that. At the beginning we need to satisfy the domestic market. I don’t see a problem in the future with exporting gas. This will be negotiable and it could be done in the future.”