Iraq to reduce fees paid to foreign oil companies
BAGHDAD - Reuters
Iraq will exclude oil by-products from foreign oil companies’ revenues in new contracts expected to be awarded in June, an oil ministry official said on March 29, effectively reducing production fees they receive from the government.
Iraq has invited foreign companies to bid for contracts to explore and develop petroleum reserves in 11 new blocks as it seeks to boost output capacity.
The new terms, announced at a press conference by Abdul Mahdi al-Ameedi, head of the ministry’s licensing and contracts office, include other provisions which will reduce companies’ profit.
The new contracts will ‘establish a linkage between prevailing oil prices and cost recovery’, Ameedi said.
They will also introduce a royalty element, he added.
Companies including BP, Exxon Mobil, Eni , Total and Royal Dutch Shell helped grow production in the past decade by over 2.5 million barrels per day to about 4.7 million barrels per day.
The new contracts offered by Baghdad will also set a time limit for companies to end gas flaring from oil fields they develop on territory under its control.
Iraq hopes to end gas flaring by 2021, which costs nearly $2.5 billion in lost revenue for the government and would be sufficient to meet most of its unmet needs for gas‐based power generation, according to the World Bank.