China firms eye Iraqi oil

July 7, 2009
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, BEIJING, July 7 – China\’s three largest oil companies may take part in Iraq\’s second auction of oil and gas fields, as the Asian giant seeks to strengthen its foothold in the oil-rich nation, state media said on Tuesday.

The country\’s top oil producer China National Petroleum Corp (CNPC), Asia\’s largest refiner Sinopec, and China National Offshore Oil Corp, all bid last week in Iraq\’s first auction of oil contracts since 2003, the China Daily said.

Only CNPC, in a tie up with British energy giant BP, won a service contract to develop the Rumaila oil field, which was also the only contract awarded in the auction.

CNPC and Sinopec may take part in the second auction, reported to be scheduled for the end of this year, as they "cannot neglect the rich oil and gas reserves in Iraq", the China Daily said, citing an unnamed source.

Fu Chengyu, president of China National Offshore Oil Corp, has said that the company might participate in the second round of bidding as well, the report added.

"Domestic oil companies will not miss this unprecedented opportunity," said the source, adding the firms may again join forces with foreign companies for the second round of bidding to reduce risk.

China has been active in gaining a share in the oil market in Iraq, which has the world\’s third largest proven petroleum reserves.

Last year, CNPC signed a three-billion-dollar deal to develop the Al-Ahdab oil field, marking the first major oil development deal that a foreign firm has secured in Iraq since the fall of Saddam Hussein in 2003.

Service contracts offered by Baghdad are based on companies accepting a fixed fee for the oil or gas extracted rather than an equity stake.

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