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UPDATE 1-Nippon Oil close to winning Nassiriya deal-Iraq
August 24, 2009 / 12:15 PM / 8 years ago

UPDATE 1-Nippon Oil close to winning Nassiriya deal-Iraq

* Deal on financing reached in Istanbul meeting

* Nippon Oil-led offer considered best

* Japex study received on East Baghdad oilfield

(Adds background, details)

ISTANBUL, Aug 24 (Reuters) - Japan’s Nippon Oil Corp. 5001.T and partners are “very close” to winning a contract to develop Iraq’s super giant Nassiriya oilfield after a deal was reached on financing, a senior Iraqi oil official said Monday.

Deputy Oil Minister Abdul Karim Louaibi also told Reuters the Iraqi Oil Ministry was talking to Japan Petroleum Exploration Co. (Japex) (1662.T) about developing the southern part of the East Baghdad oilfield, but Japex might not ultimately be the company picked for a contract.

“An agreement was reached with the Japanese on how to finance the (Nassiriya) deal and pay us,” Louaibi said in Istanbul, where Iraqi officials on Monday met with executives from Nippon Oil and Japanese state banks backing them.

“The Nippon offer is considered the best for our interests,” he said, adding a final meeting between the two sides would take place in the second week of September.

Nippon Oil Corp and its partners oil explorer Inpex Corp (1605.T) and plant engineering firm JGC Corp (1963.T) are vying with Italy’s Eni (ENI.MI) to develop Nassiriya, which Iraqi officials say has a capacity to produce 100,000 barrels per day within 18 months.

Eni officials have estimated the field’s ultimate potential to be 1 million barrels per day.

    Spanish energy firm Repsol (REP.MC) was originally also asked to bid but dropped out of the running.

    Iraqi officials have said for a while that the last hurdle to awarding the contract to the Nippon Oil consortium was Iraq’s desire that income from the development of Nassiriya not be paid into the Development Fund for Iraq (DFI).

    The principal repository for Iraq’s oil-export revenues, the DFI is audited by the International Advisory and Monitoring Board under a U.N. Security Council resolution.

    “So far it’s very obvious that the consortium led by Nippon Oil is very close to winning the contract to develop the Nassiriya oilfield,” Louaibi said. “The main issue was how to finance the deal and it was resolved today.”

    Louaibi also said the ministry was reviewing a technical study submitted by Japex for developing the southern portion of the East Baghdad oilfield outside the Iraqi capital. The government wants to boost production from the field urgently to supply the Doura refinery.

    “We are only examining this study offered by Japex and that does not mean necessarily that we will choose them to develop the southern part of the oilfield,” he said. (Reporting by Ahmed Rasheed; Writing by Michael Christie; Editing by William Hardy)

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