Chinese oil and gas producer PetroChina Co., Ltd. (SHSE: 601857 and SEHK: 0857) has not made a final decision on whether to participate in an auction Iraq plans to hold for the Nassiriya oil field on December 19 this year.
The Iraqi government plans to hold an auction for the Nassiriya oil field on December 19 this year and 52 international oil producers including China-based PetroChina, France-based Total and Russia-based Zarubezhneft have applied to take part in the auction so far.
A top executive with the listed arm of Chinese oil and gas giant China National Petroleum Corp. (CNPC) said in an interview on April 18 that it did have applied to participate in the auction, but had not made a final decision. It was busy with a further investigation and related assessments and the details were not available currently.
PetroChina has won three oil field contracts in Iraq since the the Iraqi government allowed foreign oil producers to take part in auctions held for oil fields locally and in 2011, it began recovering cost there. Also in the year, it not only became the biggest oil developer there but also overtook Exxon Mobile to become the biggest oil producer in the world, with annual output standing at 886.1 million barrels and daily output being over 100,000 barrels more than that of the US one. As a result, it is said to benefit most from oil development in Iraq. The chief economist with the International Energy Agency (IEA) even said that 80 percent of crude oil produced in Iraq would be exported to Asia and a major buyer there would be China.
However, the saying is not recognized by some industry observers. Zhang Jun, a top executive responsible for upstream resource assessment at a state Chinese oil and gas firm, pointed out that the one that benefited most from oil development in Iraq was the Iraqi government and to some extent, PetroChina acted as a labor only. And in accordance with a contract it inked with the energy authority of Iraq, it will gain service fee of USD 1.4 to USD 6 per barrel as long as it achieves an output goal set by the latter. It purchased crude oil at the price fixed by the latter locally later and regarded the purchased as a part of its annual output finally. Thus it was the Iraqi government that benefited most from oil development locally.
The Nassiriya oil field has a crude oil reserve of more than 4.4 billion barrels.
