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Evolutionary Trends of Iraqs Oil & Gas Contracts The 4 th Iraqi Petroleum Conference-IPC Iraq: Exploration, Field Development & Operation Challenges Organized.

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Presentation on theme: "Evolutionary Trends of Iraqs Oil & Gas Contracts The 4 th Iraqi Petroleum Conference-IPC Iraq: Exploration, Field Development & Operation Challenges Organized."— Presentation transcript:

1 Evolutionary Trends of Iraqs Oil & Gas Contracts The 4 th Iraqi Petroleum Conference-IPC Iraq: Exploration, Field Development & Operation Challenges Organized by Target Exploration 13&14 September 2012, The Imperial College, London, UK Ahmed Mousa Jiyad Iraq/ Development Consultancy and Research Norway Phone:

2 The Main Issues Evolution Phases of the Iraqi Model Service Contract Legal, Regulatory and Procedural RegimeFiscal Terms and ConditionsMain Features of the Model Service ContractNew Development in the Model Contract (of BR4)Pending Issues & Conclusions

3 Evolution Phases of the Iraqi Model Service Contract I- MoCs Phase- 2004/8 Number: some 40 MoCs Purpose: Joint technical studies; Training and development, and Technical consultancy. IOCs cover all costs related to these MoCs.

4 II- Technical Support Contracts-TSC (3Q-2007/mid-2008) From MoCs to TSCs; To be implemented by the IOCs during two years 2008/9 Focus : 1- First capture the production decline of the major oilfields (Rumaila, Zubair, WQ1, Missan fields and Kirkuk); 2- Then increase their production by kb/d. The Iraqi side pays for both the investment requirements and the IOCs fees to achieve these targets. The negotiation on the TSCs lasted from the last quarter of 2007 to mid-2008 without conclusion. MoO then reduced the duration of the TSCs from two to one year since, at that time, they would overlap with the timing of bid rounds. IOCs refused the one year period as been too short for such contracts. Accordingly, MoO abandoned the whole idea to focus on the bidding process.

5 III- The conversion from PSC to Service Development and Production Contract The old DPC was signed on 4 June 1997, approved by law, but frozen on 1 January 2000 due to inactivity on the field. MoU was signed on 23 June 2007 that led to the conversion to SDPC in Nov Law : abrogation of former law but without new law ratifying the new contract.!? IV- Versions of the basic Model contract I.Service Development and Production Contract-( Al-Ahdab); II.Technical Service Contract (BR1) III.Development and Production Service Contract- (BR2) IV.Gas Development and Production Service Contract- (BR3) V.Exploration Development and Production Service Contract- (BR4)

6 Legal, Regulatory and Procedural Regime Regulatory bodies. CoM/MoO: CoR/ECIOCs Qualification RequirementsMinimum Work & Expenditure ObligationLocal ContentBid Rounds Procedures and TimelinesGoverning Law and Dispute Resolution

7 Fiscal Terms and Conditions Pre-bidding fees SB MEO CIT R-factor IOCs MRF (51.25%-48.75% Formula) Capex, Opex & RF Recovery Modalities & Caps P-Factor TTSF

8 Main Features of the Model Service Contract Similar structure: number of Articles, Annexes and Addendums (except BR4); Hybrid- PSCs and Conventional Service Contracts: Duration; First/exclusive right; SB (except BR3); JMC-consensus. TOP (N/L); RF (in $ not bbl )- economic rent; State partner (25%) carried interest (except BR4- exploration phase)

9 New Development in the Model Contract (of BR4) - Holding period applies before developing oil discovery, subject to certain provisions; - Transitional State Partner(s): Initial OEC then to another when the value of R-factor exceeds1; - No participation interest (RF) for the State Partner;- RF linkage to Cost Production to avid cost exaggeration; - The ROCs TOP obligation is confined to 80% of the produced gas only; Provision for export- Dray gas;New termination condition;Local Infrastructure Fund

10 Pending Issues & Conclusions The Legality of the Concluded Contracts (FOGL, the Package of Laws & F/KR Gs); The situation of IOCs who concluded contracts with KRG (ExxonMobil, Total and Gazprom); Reduction of PPTs and renegotiating the contracts;A Fifth Round!

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