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Iraq fired up for bid round
Iraq's Oil Ministry has sent out copies of the final model contract and tender protocol for the eight oil and gas fields included in the country's first licensing round.
The delivery of the model contract and tender protocol is the first in a series of deadlines for the round fixed by the ministry.
International oil companies are to pay participation fees for the fields on which they choose to bid by 1 June, ministry sources told Dow Jones Newswires.
By 15 June, companies have to submit a bid bond of $5 million to the oil ministry for each field on which they choose to bid.
The money is recoverable for companies that do not win contracts.
The bidding and award session will be held in Baghdad on 29 June and 30 June. The session will be public and open to the press.
Officials told Dow Jones that contract signing will take place in August as the Iraqi Cabinet needs to approve draft contracts before it can sign them with winning companies.
The ministry expects the contracts will be approved by the Cabinet by July.
The fields up for grabs in the round are Kirkuk and Bai Hassan in northern Iraq, West Qurna phase 1, North and South Rumaila, Zubair and Missan in southern Iraq.
The two non-producing gas fields are Akkas in western Iraq and Mansouriya in the centre of the country.
Payment of a participation fee entitles a company to receive the documents and to bid for the fields, subject to qualification.
Of the 35 companies that pre-qualified for the round, 32 have bought the documents, ministry officials said.
They added that the final tender protocol which was also delivered to companies "constitutes the definitive process document for the licensing round" and includes further details on the bidding process and evaluation parameters, the bidding timetable, each field's signature bonuses, and a baseline production level for each field.
The most important change the directorate had made to the original model contract was that oil companies would have a 75% stake in the joint ventures, with state-owned Iraqi operators at the fields holding the rest, a source told Dow Jones.
This is an increase from the 49% to 51% equity stake initially proposed.
The tender protocol outlines the bidding parameters. Ministry officials have mentioned some of the these parameters: cost per barrel of maintaining the same output over 20 years, an incremental remuneration fee, and the cost per barrel of raising output above a predefined production baseline. Oil companies would recover their costs from oil they pump above the baseline.
The deals on offer are 20-year service contracts, which mean that winning companies would receive remuneration in kind for each produced barrel as well as cost fees.
Baghdad hopes contracts for the fields will help boost the country's crude production capacity to 4.5 million barrels per day by 2012 from 2.4 million bpd now.