Thursday, December 31, 2009

Iraq Oil Contract Goes to Angola

Iraq oil contract goes to Angola

The Angolan state-owned oil company, Sonangol, has signed two initial oilfield deals in Iraq.

The two, the Qayara and Najmah oilfields, are in Nineveh province, known as one of the most dangerous regions of the country.

There are frequent insurgencies there, as Sunni Islamic militants and al-Qaeda are both active.

Sonangol will be paid between $5 and $6 a barrel, one of the highest fees awarded in Iraq's oil deals.

The two fields combined contain an estimated 1.7 billion barrels of oil.

The deals were awarded in Iraq's second bidding round for oil contracts, held earlier this month. Contracts went to companies including Shell, CNPC and Lukoil.

Risky venture

The high fees for Sonangol reflect the risks and relatively low quality of oil at the two sites.

But they were well below what the company initially pitched for. The firm had proposed fees of between $8.50 and $12.50 a barrel.

Sonangol has said it will invest $2bn in Qayara and that several firms have shown an interest in forging joint exploration partnerships with it.

"There are at least five companies that have approached us and showed an interest to work with us to invest. We are still holding talks with them. The companies are European and American," said Paulino Jeronimo, exploration manager at Sonangol.

The deals must now be approved by Iraq's cabinet before they can be finalised.

Iraq is potentially a vastly rich oil country.

Its proven reserves now stand at 115bn barrels, below Iran's 137bn and Saudi Arabia's 264bn. But Iraq's data dates from the 1970s, before improvements in technology transformed the industry.

Angola is Africa's second most oil-rich nation after Nigeria.
Story from BBC NEWS:
Published: 2009/12/30 15:54:18 GMT

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