Iraqi government officials approved a plan Wednesday to allow BP pic and China National Petroleum Corporation to develop the Rumaila oil field, reported Bloomberg.
In an attempt to help fund the country’s reconstruction efforts through international oil licensing, Iraq, for the first time in over 30 years, auctioned off three oil and two gas fields to foreign corporations, reported the Associated Press.
Reuters reported that the Rumaila oil field, the largest oil-producing field in Iraq, has reserves of 17billion barrels.
BP pic and China National Petroleum Corp., acting as a consortium, lowered their remuneration fees, the amount the company would profit from each barrel, to $2, though the original bid was for $3.99, reported the Associated Press. The BP-led consortium displaced U.S. contender, Exxon Mobil, which made an unwavering bid of $4.80 per barrel.
Many lawmakers have opposed the licensing procedures from the beginning and have said, as reported by the Associated Press, that having the contracts approved by cabinet members rather than the parliament causes said contracts to be illegal.
The Associated Press reported that many Iraqi citizens worried “that giving foreign firms access to the country’s key resource [will open] the door for economic occupation.”
Unfortunately, the bidding process did not alleviate the amount of monetary shortcomings as Iraqi officials had hoped, reported Reuters, as many international oil firms were unwilling to accept lower remuneration fees.
The Iraqi government did not say when the signing of the contracts would take place, however, the head of the Iraqi parliament’s powerful oil and gas committee, Ali Balo, said that the contracts would “face huge problems” if the parliament is not allowed to view and sign off on them, reported the Associated Press.