Winning bid: Shell
“ The Iraqi oil ministry will develop... all the fields that were not awarded today with national capabilities ”
Shell walks away with Majnoon
Anglo-Dutch supermajor Shell and Malaysia's Petronas have walked away with one of the major prizes up for grabs at the first day of Iraq's bidding round, snapping up the supergiant Majnoon field - one of the largest untapped reservoirs in the world.
The pair proposed a per-barrel fee of $1.39 and a plateau production target of 1.8 million barrels per day, compared to a current level of 46,000 bpd, Iraq's Oil Minister Hussain Shahristani said.
The pre-barrel fee was below that specified by the ministry.
France's Total had teamed up with China National Petroleum Corporation (CNPC) in a bid to land Majnoon, which has estimated reserves of 12.6 billion barrels of oil.
Meanwhile, the ministry said four companies bid for Halfaya, with a consortium of CNPC, Petronas and Total winning the field.
CNPC has a 50% stake in the consortium, with Total and Petronas having 25% each.
The group's plateau production target is 535,000 bpd from a current rate of 3000 bpd, and it offered a remuneration fee of $1.40 per barrel.
However, the East Baghdad field and the Eastern fields cluster, in volatile Diyala province, failed to attract bids.
Part of East Baghdad's reservoir, which holds an estimated 8.1 billion barrels, extends under Baghdad's Sadr City slum. Baghdad is still wracked by periodic bombings and oil executives told Reuters they considered it unsafe to invest in the field.
The Eastern fields have estimated reserves of 300 million barrels.
Shahristani later said Iraq will develop all the fields which are not awarded today.
"The Iraqi oil ministry will develop... all the fields that were not awarded today with national capabilities," Reuters quoted him as saying.
"This is our national duty and the Oil Ministry's responsbility. We will develop these fields either as a national administration or by other means that will be decided later."
Meanwhile, Sonangol bid for the Qayara field, in Nineveh province, but the ministry turned down the offer after the Angolan company refused to lower its per-barrel fee.
Shahristani asked Sonangol to lower its proposed fee to $5 per barrel from an initial $12.50, but a company official said it could not do so.
Sonangol had set a plateau production target of 20,000 bpd for the field, which has estimated reserves of 800 million barrels of oil.
Iraq is offering 20-year service contracts in this round, its second since the 2003 US-led invasion.
The auction is one of the largest ever held, with about as much oil on offer in this round alone as Libya's entire reserves cache.
Executives from the world's top oil companies have braved the security threat to bid in Baghdad.
A series of car bombs killed 112 people in the capital on Tuesday, police said, a bloody reminder of the threat producers face in deploying staff to remote fields across the country.
Iraqi army helicopters buzzed overhead while convoys of armoured SUVs carrying executives raced through town.
Iraqi police trucks and squads of police dressed in commando gear deployed at dawn to line the streets leading to the Oil Ministry, blocking off many side roads.
Crowds of uniformed police and army personnel milled around at the ministry next to Iraq army Humvees and police pick-up trucks.
The Badrah, Middle Furat, West Qurna, Gharaf and Najmah fields will be auctioned tomorrow.