Iraq Oil Roundup: Tenders for Iraq deals

Post Conflict Reconstruction
01 April 2010

Due to our work in Basra it became apparent that IOC’s have started talks with engineering consultants and construction firms over deals to develop Iraq’s oil and gas sector.  This is the first stage of the biggest potential expansion in oil production ever seen in one region.

 

One engineering contractor said “most of the IOCs in Iraq have started to talk to contractors. Many have approved millions of investment capital and some have started drilling and surveys” His company recently completed outline design work on an oilfield development.  In total, hundreds of millions of dollars worth of project management consultancy (PMC) and front-end engineering and design (FEED) contracts are under tender now and will start operations in the second quarter of 2010.

 

Speaking from G4S Risk Management, Global MD Oil and Gas Andrew Martin said “We are seeing a significant number of tenders being released for the full range of O&G related support services.  Many more can be anticipated in the forthcoming months as the industry gears itself up to achieve increased production levels.  G4S provides specialist support to over 50% of the world’s O&G assets and we are combining this experience base with our longstanding Iraq presence and knowledge.”  (G4S has a partnership with Upper Quartile in Iraq.)

 

A series of major engineering, procurement and construction (EPC) deals are likely to follow before the end of 2010 and into 2011.  Some analysts suggest that the total procurement needs of the oil rush will exceed the combined oil and gas procurement needs in all other Gulf economies in 2011.

 

Iraq’s crude oil production in 2008 averaged over 2 mbd. Baghdad plans to boost production by 4.7 million b/d by 2016 and is targeting total output in the region of up to 12 million b/d by 2020.  “Even if you are sceptical about Iraq achieving 12 million b/d in seven years, if they achieve half of that, this will represent a massive increase”, says Samuel Ciszuk, Middle East analyst at US-based consultant IHS Global Insight.  At the same time, other countries are increasing EPC and gas activities, raising the prospect of price increases in EPC projects.

 

From a contractor’s perspective, the most exciting upcoming development in Iraq is likely to be the fields in the vicinity of Basra in the south of the country. Basra itself is set to see a significant and growing number of needs magnify, and will be unable to supply locally.  A new Hotel, for example, completed late last year, is already feeling the pressure for new space to be developed.

 

Upper Quartile is working with G4S on a trade mission to the oil and gas sector in early May.  Places are now committed but there is scope to add a further one or two.  Please contact us if you wish to participate.