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| Version 5 | Version 6 |
|---|---|
| Iraqi oil for sale in TV auction | Iraqi oil for sale in TV auction |
| (about 2 hours later) | |
| BP and China's CNPC have won a contract in the televised auction for contracts to run oil and gas fields in Iraq. | |
| Six oil fields and two gas fields are available in the first big oil tender in Iraq since the invasion of 2003. | Six oil fields and two gas fields are available in the first big oil tender in Iraq since the invasion of 2003. |
| The consortium took the contract for the 17 billion barrel Rumaila field after Exxon Mobil rejected the terms offered by the oil ministry. | |
| Other fields have also failed to find buyers, either because there were no bidders or because terms were declined. | |
| The oil ministry is offering 20-year service contracts to extract oil or gas from the fields. | The oil ministry is offering 20-year service contracts to extract oil or gas from the fields. |
| There are 31 oil companies that have been approved as potential bidders. | There are 31 oil companies that have been approved as potential bidders. |
| Red envelope | Red envelope |
| For each field, the ministry has specified a minimum production level, which is close to the amount that is currently being produced. | For each field, the ministry has specified a minimum production level, which is close to the amount that is currently being produced. |
| The bidders will not be paid for anything up to the minimum production level - but they say how much they want to be paid for each barrel produced above the minimum, and also predict how much oil they will be able to produce. | The bidders will not be paid for anything up to the minimum production level - but they say how much they want to be paid for each barrel produced above the minimum, and also predict how much oil they will be able to produce. |
| From that, the auctioneers pick a winning bidder. | From that, the auctioneers pick a winning bidder. |
| However, there is another twist. In a red envelope, the auctioneers have the maximum amount that the oil ministry is prepared to pay. | However, there is another twist. In a red envelope, the auctioneers have the maximum amount that the oil ministry is prepared to pay. |
| So far, those amounts have been significantly less than the oil companies are asking for, so the winning bidders have been asked to cut their prices. | So far, those amounts have been significantly less than the oil companies are asking for, so the winning bidders have been asked to cut their prices. |
| In the case of the Rumaila field, Exxon Mobil declined to accept the ministry's maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel. | In the case of the Rumaila field, Exxon Mobil declined to accept the ministry's maximum payment, but BP and CNPC, which had originally asked for $4 a barrel, agreed to do the work for $2 a barrel. |
| They will also be able to charge the ministry for the costs of the work they have to do on the production facilities. | They will also be able to charge the ministry for the costs of the work they have to do on the production facilities. |
| The contracts are subject to approval by the cabinet. | The contracts are subject to approval by the cabinet. |
| Other winning bidders are deciding whether to accept the ministry's maximum payments. | Other winning bidders are deciding whether to accept the ministry's maximum payments. |
| Raising production | Raising production |
| Before the auction, Iraqi officials said companies from nations involved in the 2003 invasion would be neither favoured nor disadvantaged. | Before the auction, Iraqi officials said companies from nations involved in the 2003 invasion would be neither favoured nor disadvantaged. |
| The auction was originally planned for Monday but had to be delayed because of sandstorms in Baghdad. | The auction was originally planned for Monday but had to be delayed because of sandstorms in Baghdad. |
| "Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years," Oil Minister Hussein al-Shahristani told Iraqi public television. | "Our principal objective is to increase our oil production from 2.4 million barrels per day to more than four million in the next five years," Oil Minister Hussein al-Shahristani told Iraqi public television. |
| Iraq has the world's third-largest proven oil reserves, with 115 billion barrels, of which the fields up for auction account for about 43 billion barrels. | |
| But there has been some controversy about the auction, with members of the Iraqi parliament objecting to not having the chance to approve the deals. | But there has been some controversy about the auction, with members of the Iraqi parliament objecting to not having the chance to approve the deals. |
| Parliament has not yet passed an oil bill. Some observers have suggested that the decision to award service contracts, instead of the more common production-sharing contracts, was taken to make it easier to proceed without such a bill being passed. | |
| Under a production-sharing contract, an oil company would recoup its costs and then be entitled to a proportion of the oil extracted, instead of being paid a fixed fee for each barrel. |