Iraq oil exploration rights: PPL among nine pre-qualified firms

[LahoreEstate]

SEOUL (April 04 2009): State-run Korea National Oil Corp (KNOC) and SK Energy said on Friday they had failed to pass the pre-qualification process for oil exploration rights in Iraq. The firms said they were not informed of the reasons, but some industry sources and a report from Baghdad said it was due to their involvement in Iraqs autonomous Kurdish region.

KNOC and SK Energy said their investments in the region would not be affected. "We werent notified of the reason but we will continue our investments in the Kurdish region," said a spokesman at KNOC, when asked if the Kurdish deal had hindered the qualification process.

SK Energy also reiterated that it will keep its investment in the region, minor compared to KNOC, but will not make any further investments without approval from the Iraqi central government. Baghdad was angered by the firms sealing a product-sharing contract with the Kurdish government for the Bazian oil fields in the autonomous region in 2007.

Iraqs Oil Ministry has qualified nine foreign oil firms out of 38 interested parties for a second round of bidding for contracts in some of its prized oil and gas fields. The firms are Russian state oil firm Rosneft and Russian mid-sized oil firm Tatneft, Kazakh state-run KazMunaiGas, Vietnams Petrovietnam, Angolas state-owned Sonangol, state-run Pakistan Petroleum Ltd (PPL), Japan Oil, Gas and Metals National Corp (JOGMEC), Cairn Energy PLC of Britain and state-run Oil India Ltd.

Earlier in the day, an AFP report out of Baghdad said Iraqs Oil Minister had informed the South Korean Ambassador to Baghdad that KNOC and SK Energy will be excluded from bids to participate in oil development projects in Iraq because of their involvement in the Kurdish region.

"For that reason, these two companies have been prevented from taking part in tenders. If these companies cancel this contract 0they will be able to take part in the next contract tender," the report said, citing a statement released after a meeting between Oil Minister Hussein al-Shahristani and Ambassador Ha Tae-yun. But Seouls energy ministry said the comment was a reiteration of al-Shahristanis usual stance, adding a co-operation deal signed between the two countries would still proceed.

Under the memorandum of understanding signed during Iraqi President Jalal Talabanis trip to Seoul in February, South Korea will provide Iraq with $3.55 billion in infrastructure in return for oil field stakes in its southern Basra region. "A South Korean working-level delegation is slated to visit Baghdad early this month to discuss details of the bilateral agreement," said the statement from the Ministry.

The two firms could have another chance to participate in the next round of bidding for Iraqi oil field exploration rights. Korea Gas Corp is currently the only South Korean firm with a licence to bid for an oil development project in Iraq. The right to sign independent oil deals with foreign oil firms has been a sore point between the Kurdish regional government and the central government, as the two sides struggle, sometimes publicly, for control of oil resources and territory.

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