Oil Companies are not exactly frothing with interest...
http://www.forbes.com/feeds/ap/2009/...ap6602591.html
BAGHDAD -- The first international bidding process in more than 30 years for development rights to some of Iraq's oil fields has finished, with only one field being awarded.
Iraq had offered six oil and two gas fields in a landmark auction the government hoped would help boost output to 4 million barrels per day and generate cash it desperately needs for postwar reconstruction.
But the bidding round Tuesday faltered quickly as companies demanded terms far greater than what the government was willing to provide.
There's a popular misconception that China's oil deals in Iraq means that the Chinese are somehow beating Western companies to the jackpot. The reality is that the terms being offered are so restrictive that only the Chinese - who have demonstrated a very high risk tolerance in this and other markets - are interested. Given the terms being offered, this is not about oil companies fighting for the privilege of working in Iraq, but about the Iraqi Government struggling to find anyone willing to invest on its terms.
Another common misconception is that if Chinese oil companies do the investing the oil will automatically go to China, if US oil companies do the investing the US gets the oil, etc. This is simply inaccurate: the oil will be sold to the highest bidder no matter who pumps it. All oil consuming countries have an interest in seeing Iraqi production increase, but as long as that oil comes onto the market it doesn't matter at all where the oil actually goes. If Iraqi production went up to 5 mbpd the US would benefit from lower prices even if every drop produced in Iraq went to China.
Unfortunately for all concerned, that kind of production increase is not likely under the investment terms now being offered.
Memorandums of understanding...
Again, there are many interesting data points to consider on this topic, here are a few more:
From the Chinese Economic and Commercial Counselors Office in Pakistan:
Quote:
ISLAMABAD (April 18 2009): Pakistan and China are set to sign memorandum of understanding (MoU) to enter into joint venture for oil and gas exploration. The MoU will be signed by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who left here for China on Friday.
Sources revealed to the Business Recorder that the MoU would enable Pakistan Petroleum Limited (PPL) to enter into joint venture with China state run oil and gas exploration companies for exploration activities in Pakistan as well as in foreign countries.
The government had increased the well-head gas price cap to 100 dollars per barrel crude oil price from 45 dollars per barrel crude oil in 2009 Petroleum and Exploration Policy that would also attract the Chinese companies to explore oil and gas reserves in Pakistan, sources said.
A 2007 posting on Gulf Oil & Gas: China's CNPC Close to MoU on $3.6B Iran LNG Project
Quote:
China National Petroleum Corp. is close to signing a memorandum of understanding to invest around $3.6 billion for developing Iran's South Pars natural gas field, a Chinese official familiar with the deal said Friday.
The MoU with Iran's oil ministry will involve a pledge by CNPC to spend around $1.8 billion on exploration and production in the SP14 gas block in the field and a further $1.8 billion on building a liquefied natural gas plant, the official said.
State-owned CNPC is in talks with Norway's Statoil ASA (STL.OS) about joining the SP14 project, the official added.