LONDON (AFP)--The predominance of Asian operators among bidders
for a chunk of Iraq's vast oil fields shows the rising power of
small and flexible state-run companies prepared to take risks,
analysts say.
The latest bidding round, the second since the 2003 U.S.-led
invasion of Iraq, covers 11 gas and oil fields, including the
massive West Qurna field where reserves are believed to extend to
some 20 billion barrels of oil.
"Asian companies are more aggressive, prepared to take more
risks," said Manoucher Takin of the Center for Global Energy
Studies, or CGES. "It has been the classic thing for the last few
years."
The short-listed bidders are mainly national oil companies,
including five from Asia.
They are JOGMEC of Japan; Kazakhstan's KazMunaiGas Exploration
& Production, or KMG-EP (RDGZ.KZ); Oil India Ltd.; Pakistan
Petroleum Ltd. (PPL.KA); and PetroVietnam, according to the Iraq
oil ministry.
From Europe, Russian concerns Rosneft (ROSN.RS) and Tatneft
(TATN.RS) and the U.K.'s Cairn Energy PLC (CNE.LN) are pitching for
business, while Angola's Sonangol represents Africa.
The companies will be invited to take part in a second round of
bidding.
The development of the fields could help boost Iraq oil
production by up to 2.5 million barrels per day, Oil Minister
Hussein al-Shahristani has said.
Francis Perrin, editorial manager of the review Arab Oil and
Gas, said the list "reflects the growing power of Asian national
oil companies in recent years, both in the bidding rounds and
bilateral agreements."
Samuel Ciszuk, Middle East analyst at the London-based IHS
Global Insight, said it was important to recall that the nine
companies "are in addition to those already pre-qualified" for the
first bidding round.
In June last year, 35 oil companies including the biggest
players such as Chevron Corp. (CVX), BP PLC (BP) and Total SA
(TOT), were pre-selected before a contract had even been
signed.
That first round of bidding was only open to companies which had
already operated giant oil fields - a condition which left many
smaller concerns on the sidelines.
The bar was set considerably lower for the second bidding round,
allowing in the kind of second-tier operators who, in some cases,
have never operated outside their own countries.
Analysts said the entry of the new players into the market could
also help the Iraq government limit the power of the big, private
firms, or International Oil Companies known as IOCs.
Ehsan Ul-Haq, head of research at JBC Energy in Vienna, said
Iraq authorities "will not allow IOCs to get a bigger part of the
cake."
"They need their know-how, but they will not allow these
companies to take control of their oil policy."
The entry into the Iraq market of smaller players, which can
react more quickly than their larger rivals, could also push the
big boys to drop their resistance to Iraq-set conditions and sign
contracts.
"These smaller companies, especially NOCs, which are driven very
much by political motivations rather than the highest possible
margin, can put additional pressure on the IOCs to agree," said
Ciszuk of IHS Global Insight.
Takin of CGES said the tone was set when the first contract
inked after the fall of Saddam Hussein was with the state-run China
National Petroleum Corp.
Perrin, from Arab Oil and Gas, added, "In general, the small
operators are more prepared to take risks than the majors. For
them, Iraq is an Eldorado."
Iraq has the third-largest oil reserves in the world with more
than 115 billion barrels, behind Saudi Arabia and Iran.
It is a member of the 12-nation Organization of Petroleum
Exporting Countries, or OPEC, but its output isn't considered part
of the cartel's official production quota because of the continuing
unrest in the country.