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Iraq amends auction terms to favour oil companies

Wednesday, 22 February 2012 | 00:00
Iraq has made "favourable" changes to some of the terms of the 20-year technical service contracts offered to international companies to explore for oil and gas in 12 promising blocks listed in the country's fourth licensing auction scheduled for May, a person close to the Iraqi oil ministry said.
The most important change the Iraqi oil ministry has made to the original model contract is that international firms would have 100 per cent stake in the projects, with state-owned Iraqi companies holding none, he said.
That was up from the 75 per cent stake initially proposed and should also allow faster cost recovery as the companies will have bigger shares of the discovered and produced oil and gas output to pay their bills.
New changes
The new changes were made after feedback from oil and gas companies concerned that they would be taking on risky contracts for minimal rewards, the person, who asked not to be named, told Dow Jones Newswires.
The Iraqi oil ministry will hold a meeting in Istanbul next month with its advisers, the UK-based Gaffney, Cline and Associates, to finalise the draft model contract before handing it to companies in April, the source said.
The person said the ministry has changed a provision that allowed the Iraq ministry to postpone development of fields, to a period of up to seven years from the date of the announcement of commercial discovery, which was mentioned in the previous model contract and was one the terms disliked by potential bidders.
Source: Dow Jones
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