Business | Oil & Gas
Channel Sponsor
Failed bids cast pall over country's oil sector
It was for one of the biggest energy auctions in history that well-heeled executives braved the dust and danger of Baghdad last week to jet in and deliver bids for lucrative long-term oilfield contracts.
- Reuters
- Published: 23:51 July 3, 2009
Baghdad: It was for one of the biggest energy auctions in history that well-heeled executives braved the dust and danger of Baghdad last week to jet in and deliver bids for lucrative long-term oilfield contracts.
For months Iraq had hyped Tuesday's auction as a triumph in transparency and a bonanza for global firms, fending off critics at home by promising the multibillion-dollar service deals would mark a turning point for the struggling oil sector.
But by the end of the day, the carefully engineered auction had dissolved into chaos, with firms shaking their heads at exacting contract terms and wondering aloud how Iraq's cabinet would choose winners for deals that went unawarded.
In a cavernous hotel ballroom in Baghdad's fortified Green Zone, exasperated executives crowded around a top auction official after a long day of bidding revealed a huge gap between what Iraq was prepared to pay them and what they expected.
Anxiety written on their faces, they wanted to know what would happen next in the unchartered post-auction territory.
How would the Iraqi cabinet select winners to the outstanding deals? When would that happen?
"What about transparency?" one executive demanded, his eyes wide with alarm.
Fear is not unusual as leading firms contemplate wading into Iraq's fractious political scene and untested legal system to do business with a government struggling to shake off a reputation for political infighting and corruption.
By mid-afternoon on Wednesday, fears about transparency became moot when the cabinet declared it had rejected all outstanding bids. That left executives from major firms such as Total and Exxon Mobil with little to show for their journey.
It is unclear what the flop of Iraq's first major oil tender in decades, supposed to award up to eight major contracts and ended up only securing one, means for future auctions and for the future of the oil sector.
Iraq plans a second bidding round for year's end, for fields seen as even more lucrative because they are untapped, but last week's fracas may give firms pause about signing up again.
Share this article
Related Articles
Popular in Business
-
Budget travel
Airlines in the region
Take a pictorial look at some of the budget airlines in GCC
Business Editor's choice
-
Cafe Nero's premium coffee blends
UK chain plans to open 50 outlets in region following UAE launch
-
Emirates to fly direct to Tokyo
Airline considers code-share deal with JAL after adding second destination in Japan
-
Work on world's longest sea crossing
The proposed Qatar-Bahrain causeway project is estimated to cost Dh9.9 billion
