| Submit your comments on this article |
| Iraq |
| Ambitious oil firms dismayed at Iraq oil auction |
| 2009-07-02 |
| [Al Arabiya Latest] It was for one of the biggest energy auctions in history that well-heeled executives braved the dust and danger of Baghdad this 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. |
| Posted by:Fred |
| #6 The thing is that the other option don't incentivise to get the oil out in the most profitable way, or provide ways to bribe state officials to undervalue assets. |
| Posted by: Bright Pebbles 2009-07-02 11:23 |
| #5 Other ways to make the determination: 1) Who's going to pay the most cash up front for the rights to explore (very useful when not much is known about how much is to be found and produced.) 2) Who's going to pay the most cash per barrel (as opposed to percentage) - useful when budgeting in a volitile oil price marketplace. 3) Who's going to hire the most natives, either in the oil projects or other committments - politically very useful. 4) Who's going to pay the biggest bribes - historically the most important but tougher these days (now done by paying 'fines' for imaginary infractions, especially 'green' infractions.) |
| Posted by: Glenmore 2009-07-02 09:40 |
| #4 Here's a really easy way to decide on oil rights. Who's going to give the state the largest %age of the oil extracted? Then the state can hand out an oil dividend. |
| Posted by: Bright Pebbles 2009-07-02 07:48 |
| #3 MMS lease auction system: there is a uniform nominal minimum bid, then any interested companies submit a secret bid for whatever amount they want, then the MMS checks the high bid against their own assessment of what the lease should cost. If the company bid is high enough, they get the lease, if not, the tract stays open. It kind of means that if you win the tract you paid too much. |
| Posted by: Glenmore 2009-07-02 07:46 |
| #2 I once spent a couple of months studying auction theory---biggest pile of crock since phlagiston theory. |
| Posted by: g(r)omgoru 2009-07-02 05:37 |
| #1 So... Is someone too optimistic or just too greedy for the existing market? |
| Posted by: tipover 2009-07-02 00:38 |