New Contracts Sweetened.

The Oil Ministry now says it has sweetened the terms for IOCs bidding for its oilfields by reducing the tax. But it does not elaborate on this.

The head of the Oil Ministry's largest producing company, South Oil Co. (SOC), Dhia' Ja'far, says the new terms will result in the signing of agreements for the ten fields of the second bidding round, scheduled to be held on Dec. 11-12 in Baghdad. "There is unique opportunity for international oil companies to work with us to develop these oilfields", says Tamer al-Ghadhban, top energy adviser to the PM. Ghadhban, twice oil minister after the 2003 US-led invasion, says he expects the second auction to attract more companies.

Abdul-Mahdi al-Ameedi, head of the ministry's Petroleum Contracts and Licencing Directorate (PCLD) says the new contract model specifies the difference between discovered and undiscovered reservoirs, adding: "If a contracted company discovered a new reservoir [in addition to the one already found], we can agree on a new payment fee for each barrel produced from that given reservoir". He says the production plateau for each field in the second round has to be reached between seven and 13 years after development work begins.

In the first round, the output plateau had to be reached in the seventh year. A final model contract has been presented to IOCs. Similar to the first round's model contract, the new contract gives a 20-year service period, renewable for another five years, with IOCs taking 75% in the joint JV and the government holding the remaining 25% through a company designated by the Oil Ministry.