Last updated: 15 July, 2012

Iraq signs exploration deal with Pakistani firm

Iraq has signed a gas exploration deal with Pakistan Petroleum on Sunday, a senior official said, the first of three successive contracts aimed at increasing the country’s oil and gas reserves.

“We are now initialling a contract between the Iraqi oil ministry and Pakistan Petroleum,” said Abdul Mehdi al-Amidi, the head of the ministry’s contracts and licensing department.

Referring to deals with consortia led by Kuwait Energy and Russia’s Lukoil that will be initialled on Monday and Tuesday respectively, Amidi said: “We will send all these agreements to the cabinet for approval, and then we will sign the final contract.”

“That will take about one month.”

During a two-day auction for exploration blocks in May, Pakistan Petroleum won a contract for a 6,000 square kilometre (2,300 square mile) block thought to contain gas in the central Iraqi provinces of Diyala and Wasit.

The company agreed to a remuneration fee of $5.38 per barrel of oil-equivalent eventually extracted.

The May 30-31 sale, which ended with three blocks awarded to foreign firms, was labelled a failure by analysts as eight of the 12 blocks on offer received no bids whatsoever, including two that were offered twice.

The bid round, the fourth public auction of Iraqi energy contracts since mid-2009, came amid progress in ramping up oil exports, which account for the vast majority of government income, and as Baghdad eyes higher gas production to increase woefully inadequate electricity supplies.

Iraq has proven reserves of 143.1 billion barrels of oil and 3.2 trillion cubic metres (111.9 trillion cubic feet) of gas, both of which are among the highest such deposits in the world.