OVL to get oil block sanctioned by Saddam

NEW DELHI: Iraq will give ONGC Videsh an onshore oil block that was awarded to it by the erstwhile Saddam Hussein regime but said Indian firms will have to participate in the auction of Tuba oilfield that was under discussion when US invaded the oil-rich nation.

Iraq's Oil Minister Hussein al-Shahristani said the contract for Block 8, in southern Iraq bordering Kuwait, will have to be amended in accordance with the new oil and gas law that Baghdad is to pass in next two months before beginning work.

"All contracts signed by the previous regime or Kurdish regional government will have to be revisited and amended to make them compliant with our new law," he told reporters after a meeting of the Indo-Iraq Joint Working Group here.

For Tuba oilfield, for which a consortium of OVL, Reliance Industries and Sonatrach of Algeria had been shortlisted in 2000, he said: "Contract was not signed and so it will be put up in international competitive bidding round and Indian companies will have to bid for it."

Iraq will offer by this year end, onshore oil and gas blocks for bidding in the first round, he said.

The war-ravaged nation sought Indian companies help to rebuild its refineries but New Delhi expressed reservation in "doing charity" when the same refineries upon commissioning compete with its units for export of fuel.

"We are ready to build new refineries and also revamp and modernise old ones. But for that they need to give us oil fields on nomination basis. You cannot expect us to create competitors just for nothing," a top Indian official said.

Al-Shahristani said Iraq was ready to supply long-term crude oil at a discounted price to companies building refineries but ruled out giving fields on nomination basis.

"Law does not allow us to give fields on nomination basis."

Iraq has eight refineries, none of which were damaged during the US-led invasion in 2003. Despite a refining capacity of 630,000-750,000 bpd, Iraq currently produces only 477,000 bpd of refined products.

The war-ravaged nation wants to build at least four new refineries in Kirkuk, Missan, Nahrain (140,000 bpd each) and in Kuya (70,000 bpd), doubling its refining capacity to 1.5 million bpd in the next 10 years.

"Iraq is determined to supply India its energy needs. (In return) we need Indian expertise and experience in reconstruction of our economy," he said. Indian companies import about 10-11 million tons of Iraqi crude oil every year.

"We see Indian companies coming to Iraq now not tomorrow," he said.

Iraq, the minister said, is currently producing 2.7 to 2.8 million barrels of oil per day. "Output is not proportional to the resources. Countries with lesser resources are producing over 6 million barrels per day."

Baghdad wants to expand production to 4 million barrels per day by 2010-11 and to 6 million bpd in 10 years.

Iraq, he said, has 78 discovered fields of which 10 each are super giants, giants and large fields. Besides these there are some 500 geographical sections which are thought to be oil bearing.

While discovered oil fields - numbering 52 - have been exclusively reserved for Iraqi National Oil Company (INOC), exploration areas will be offered for bidding in the auction rounds, he said.