Six oil and two gas fields were set to be auctioned off Tuesday and Wednesday to a group of 35 foreign firms including Total, Royal Dutch Shell and Exxon Mobile.
Live broadcasted auctions are seen as a transparent means of appeasing concerns over corruption in government oil deals after Iraqi Oil Minister Hussain Al-Shahristani was accused of corruption earlier this month.
But some felt the auction had been ill-timed given heightened security concerns as U.S. troops complete their withdrawal.
“We have a temporary situation in which the security environment has gotten worse,”
Professor Paul Rogers, an expert on oil security in the Department of Peace Studies at Bradford University, told The Media Line. “That may be connected with the caution with which foreign oil countries are treating Iraq at the moment; three months down the line it might be different, so it may be partly a question of timing.”
The potential for profit from the oil fields seems to have trumped oil companies’ security concerns. “It appears that a number of companies are willing to take the risk,” Rogers added. “It may well be that companies are looking to the long term profits, which is overriding the fears of short-term security problems.”
Addressing the security situation, Iraqi Prime Minister Nouri Al-Maliki told bidders at the start of the day that the government planned to “offer security protection, offer all guarantees for their investments and offer all the facilities needed to ensure the success of this process.”
Foreign bidders seem to have taken the developments with a grain of salt.
“We already have a foot in Iraq, so we see that Iraq security is tenuous but improving,” a spokesperson for Royal Dutch Shell, one of the bidders, told The Media Line. “We continuously do threat assessments.”
“All in all it’s a key that our employees and contractors are secure and safe,” he added. “It’s a clear priority.”
The highly anticipated auctions have so far seen mixed results. One of the most controversial oil fields – the 2.4-billion barrel Bai Hassan oilfield in northern Kirkuk – has secured bids from ConocoPhillips and China’s CNOOC Ltd.
The Mansouria oil field, located in the Diyala province, holds 3.3 trillion cubic feet of reserves, with an estimated production potential of 330 million cubic feet a day. Despite the potential profit, the field – in an area that has incurred tremendous violence throughout the U.S. presence in Iraq – has not garnered any interest from international buyers.