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Edison ‘may bid for Iraq’s Akkas gas field’

Istanbul, August 2, 2010

Edison, Italy's second-biggest utility, may bid for Iraq's Akkas natural gas field in the government's third bidding round for service contracts, two company officials said on Monday.

The sweet gas at Akkas, which has estimated reserves of 2.1 trillion cubic feet, has a lower sulphur content than at least one of the other two fields, making it preferable for development, one Edison executive, who declined to be named told Reuters on the sidelines of a workshop in Istanbul.

The Iraqi Oil Ministry is holding the workshop in the Turkish city of Istanbul for companies interested in bidding for service contracts for three gas fields it wants to develop ahead of an Oct. 1 tender.

Entering the tender is a "strategic decision" for Edison because it seeks a toehold in Iraq, the official said. Iraq's estimated gas reserves of 112 trillion cubic feet (tcf) make it the world's 10th largest, while its oil reserves are the third biggest, according to US Department of Energy data.

Edison led a group of companies that was the sole bidder for Akkas at a first bidding round last year, but its proposed remuneration fee was well above what Iraq suggested.

Turkiye Petrolleri (TPAO), Turkey's state oil company, was part of the Edison-led consortium that bid for Akkas last year.

Another official from Milan-based Edison confirmed the company is solely interested in Akkas and said it could seek to form a partnership to bid for the field with TPAO.

"Turkey offers a natural export route," he said. Turkey borders northern Iraq.

A TPAO manager declined to say for which field it may bid and added any deal on a partnership would come at the tender.

Easier to export

Besides Akkas, contracts to develop Mansuriyah on the Iranian border with estimated reserves of 3.3 tcf of gas and the southern Siba field with 1.1 tcf are also on offer.

Akkas is located in Iraq's western Desert, which would make creating export routes easier, the first Edison official said.

Iraq currently has no functioning pipelines exporting gas.

The Oil Ministry wants the companies which place winning bids to build most of the infrastructure required for exports, company officials said.

Half of the gas may be exported, a senior Iraqi oil official said on Sunday, but other Iraqi officials said on Monday that amount had yet to be decided. Exporting gas is controversial because of Iraq's inability to meet demand for power.

Seven years after the US invasion, the national grid supplies a few hours of power each day. Iraq hopes opening its gas sector to foreign investment will boost its generation, hit by years of sanctions, war and underinvestment.

In addition to Edison and TPAO, officials from Total of France, Norway's Statoil, South Korea's Kogas, Japan Oil, Gas and Metals National Corp and Itochu Corp also attended the workshop.

Russia's TNK-BP, Kuwait Energy, India's Oil & Natural Gas Corp and Kazakh KazMunaiGaz were also represented. Iraq has said companies like Total, Kogas and Royal Dutch Shell are favoured because of their experience. – Reuters




Tags: Istanbul | Bid | Edison | Akkas | Gas fireld |

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