Russia’s Bashneft and Britain's Premier Oil have been awarded a contract to explore for energy in south Iraq, a spokesman said Monday, more than a month after the sale in which the block was offered.
The 8,000 square kilometer (3,000 square mile) exploration block, referred to as Block 12, lies across the western desert of Iraq’s Muthanna and Najaf provinces and is thought to contain oil.
The consortium will be paid $5 per barrel of oil equivalent extracted. A consortium including Bashneft had originally bid $9.85 per barrel during the May 30-31 auction.
“A few days after the bid round, Bashneft agreed to the price set by the oil ministry for Block 12,” Oil Ministry spokesman Assem Jihad told AFP.
“Premier Oil joined them with a 30 percent stake in a consortium.”
He added: “We will set a time to sign an initial contract, and then it will be transferred to the cabinet to be approved.”
The May auction, which ended with three blocks awarded to foreign firms, was labeled a failure by analysts as eight of the 12 blocks on offer received no bids whatsoever, including two that were offered twice.
The Bashneft-Premier Oil deal, which was awarded after the auction closed, is the fourth such exploration contract awarded.
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 meters (111.9 trillion cubic feet) of gas, both of which are among the highest such deposits in the world.