Lukoil and Japanese partner Inpex secured the 5,500 square-kilometre Block 10 with oil potential in Muthanna and Dhi Qar provinces in the south, which executives had expected to attract bids in an auction where investors have generally shied away, Reuters reported. Pakistan Petroleum won gas Block 8 in Diyala and Wasit provinces in eastern Iraq.
Bidders have been deterred by tough terms of service contracts on offer, which are seen as less profitable than production sharing deals offered elsewhere.
Earlier, Chinese firm Zhenhua had decided not to partner with PPL and invest in Iraq due to security issues.
PPL and Zhenhua had entered into a joint venture to participate in Iraq’s fourth licencing round for exploration blocks, and were expected to make an investment of $200 million if their bid would have been accepted.
PPL would have had 49% stake and Zhenhua a 51% share according to the initial agreement.
Published in The Express Tribune, June 1st, 2012.
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