Iraq: Shahristani came out of the bidding round stronger than ever

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Tactical Newswires
July 1, 2009

Iraq: Shahristani came out of the bidding round stronger than ever

The Iraqi Oil Ministry held on 30/6/9 a first bidding round of oil service contracts and ended up with only one contract being awarded. The contract was for the Rumailah oil field and was awarded to BP-CNPC alliance.

Circles close to the Iraqi Premiership and sources close to the Oil Ministry and state-owned South Oil Company (SOC) show satisfaction with the way Oil Minister Hussein Al-Shahristani used to deal with bidders.

These circles and sources say that the tactics he adopted helped him win further presence, respect and strength in the country.

Besides, he could keep secret his conditions to award the contracts. He is said to have only told PM Nuri Al-Maliki about these conditions.

According to the same circles and sources, a preliminary evaluation of the results of the first bidding round show the following:

1- Al-Shahristani came out of the bidding round stronger than ever, even if this is to go at the expense of his relation with the oil companies;

2- Al-Shahristani contained all the campaigns that were waged against him to make him delay the awarding the contracts. Note that the campaigns were launched against him from all parts, notably from the Kurds and the Parliament’s Oil and Gas Committee.

3- Al-Shahristani failed to keep promises to help some oil companies get contracts. The same sources mention Total, ConocoPhillips, ExxonMobil and Statoil among these companies. According to these sources, these oil companies thought that Al-Shahristani would accept a price between $3.5 and $4 for each extra barrel extracted from the concerned oil field. However, this was not the case as he was setting a price of $2 or below for each extra barrel.

4- The BP-CNPC alliance was stronger and firmer than any other alliances, as both companies agreed to give Al-Shahristani one position while the companies that were part of other alliances were giving him different positions, notably in what concerns the issue of the extra barrel price.

Sources close to Al-Shahristani say that the latter is very confident that the companies will understand his conditions and affirms that the matter is merely economic and that he could not meet his promises because of the pressure on him. [/size]

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