State-owned oil major China National Offshore Oil Corporation (CNOOC) is holding negotiations over the development of the Maysan (Misan) oil fields in southern Iraq, according to the Middle-Eastern nation's oil minister Hussain al-Shahristani. Baghdad has turned down a number of bids by a string of international oil firms to sign a short-term technical support contract for the Maysan fields. The Maysan group of fields comprising three oil fields with total reserves estimated at around 2.5 billion barrels were offered in the country's first bidding round. However, after a stringent selection process, a joint venture between CNOOC and fellow Chinese firm Sinochem was the only one to bid for the Maysan fields.
Although the two firms did not accept the $2.30 service fee offered by Iraq, al-Shahristani has said that a Chinese company has now come back and accepted this offer. If the reports are confirmed, the next step is for a contract with the reported service fee to be inked. If this proves to be the case, it will serve to underline the paramount importance of access to foreign reserves for Chinese firms over the price they are forced to pay for them.
The deal stands to join a series of contracts that Iraq has signed in a bid to boost its output capacity in seven years to 12 million barrels per day (bpd), rivaling top producer Saudi Arabia, from around 2.5 million bpd now. Despite the ongoing security concerns in the troubled nation, perceived low profitability of many of the offered contracts and very slow development of the upstream and downstream sectors, Iraq's vast hydrocarbon reserves have continued to attract interest.
There is a wide variation in estimates of Iraqi oil reserves. The BP Statistical Review of World Energy, published in June 2009, predicts that there are some 115 billion proven barrels of oil in the nation. However, as only about 10% of the country has been explored, Iraq could in fact be sitting on anywhere between 45 billion and 100 billion additional barrels.
