Iraq offers 3 oilfields to India, agrees to renegotiate on OVL: Moily
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Iraq offers 3 oilfields to India, agrees to renegotiate on OVL: Moily

Last Updated: Thursday, July 11, 2013, 18:57
 
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Iraq offers 3 oilfields to India, agrees to renegotiate on OVL: Moily
New Delhi: In a first from an oil-rich Gulf nation, Iraq has offered three discovered oilfields to India on nomination basis and has agreed to renegotiate an oil block that has been pending since 2000.

Iraq, India's second-largest crude oil supplier after Saudi Arabia, offered to give state-owned Indian firms Kifil, West Kifil and Merjan discovered oil blocks in the Middle Furat oilfields on nomination basis, Oil Minister M Veerappa Moily told reporters here.

Moily, who returned from Baghdad after attending the Indo-Iraq Joint Commission Meeting, said the "fields are discovered and work can immediately start."

This is the first time in recent past that an oil-rich Gulf nation has offered fields on nomination basis. Previously, Iraq and other Gulf states asked Indians to participate in an international competitive bidding to get the oilfields.

Also, Iraq has agreed to immediately renegotiate and conclude the contract for Block 8 with ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp, he said.

Block-8, located in the western desert in southern Iraq bordering Saudi Arabia and Kuwait, was awarded to OVL in November 2000 by the then Saddam Hussein government. However, the government formed after the US invasion of the oil-rich country, sought re-negotiation of the contract which has been pending so far.

The post-Saddam Hussain regime had initially agreed to signing of a Production Sharing Contract (PSC), where OVL would have got ownership of the oil it produced from Block-8. But the success of post-war licencing rounds, where global majors committed to develop oilfields for a small fee, has seen Baghdad change track and offer a service contract to OVL.

The Block 8 already has a discovery and is estimated to hold 645 million barrels of in-place reserves, of which 54 million are recoverable.

Officials said the contract for all the four blocks would be a service contract wherein OVL will be paid a fixed per barrel fee for its efforts in exploring and producing oil.

Moily said Iraq also agreed to consider investment in the upcoming 15 million tonne a year oil refinery of Indian Oil Corp (IOC) at Paradip in Orissa.

"The Iraqi side also expressed interest in the proposal of IOC for participation in a refinery project in Iraq," he said adding the OPEC producer committed to meeting the long term requirement of crude oil of India and was also open to consider more favourable commercial terms including extending the interest free credit period from 30 to 60 days.

Iraq supplied 24.04 million tons of crude oil in 2012-13.

"Possibilities for cooperation in the gas sector that could include import of LNG from Iraq, Indian participation in exploration as well as value addition through petrochemical projects and liquefaction terminals in Iraq were discussed," he said.

Exploration and development contract for Block-8, Western Desert, was signed by OVL with the Oil Exploration Company of Iraq, on 28 November 2000, at New Delhi.

As per the 2000 contract, OVL was to reprocess and interpret existing 2-D seismic data. It was also to acquire, process and interpret 1,000 km of 2D and carry out 300 sq km of 3D seismic survey besides drilling two wells.

The service contract now being drawn would be similar to the one China National Petroleum Corp (CNPC) had signed recently for developing Al-Ahdad oilfield in central Iraq.

OVL would act as the operator of the field until it recoups all its costs and set up a joint operating company with the local operator to take over once development costs have been repaid.

Baghdad has, however, refused the Tuba oilfield for which OVL in consortia with Reliance Industries and Algeria's Sonatrach were in negotiations before the US attack on Iraq.

OVL-Reliance-Sonatrach had been shortlisted for Tuba in 2000 but the contract could not be signed. Tuba lies in southern Iraq between the Rumaila and Zubair oilfields and could reportedly yield as much as 300,000 barrels per day (bpd) of medium and heavy crude.

"Iraq is renegotiating terms for all the contracts signed by the previous Saddam Hussein regime. But those like Tuba which had not been signed, the fields will be put on auctions," an official said.

Moily said he had that the JCM meeting, which was happening after a gap of 7 years, highlighted the keenness of Indian companies for participation in the Nassiriya integrated oilfield and refinery project.

Reliance Industries has been shortlisted for the project.

Also, Indian side expressed keen interest on investment in existing and new Ammonia-Urea plants.

"After detailed deliberations it was agreed to have a Letter of Intent and Confidentiality agreement to establish an urea plant and phosphate fertilizer unit as joint sector projects in Al-Qaim/Al-Anbar area in Iraq which has all facilities like water, natural gas, railway connectivity to the port, phosphate etc, which are crucial requirements for the success of the fertilizer projects," he said.

Considering the abundant availability of Sulphur in Iraq, India expressed its intention for immediate import of Sulphur from Iraq.

The issue regarding pending dues of Indian companies of USD 2.29 billion was discussed in detail and it was agreed that Iraq would examine the same and revert before the visit of their Prime Minister to India. Both sides also agreed to expand the trade basket and make it more diversified.

PTI


First Published: Thursday, July 11, 2013, 18:18


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