Iraq reworks fees to bolster 4th energy auction

The Ministry of Oil will be trying to squeeze even more revenue out of future development contracts by closing one of the "loopholes" found in earlier contracts.

"If the total production is 1 million barrels per day and the cost recovery is (the value of) 300,000 bpd, then we will deduct the 300,000 from the net production and the remainder is 700,000 bpd, so we will pay remuneration for the 700,000 only, not for the 1 million," Ameedi said. "The remuneration will be higher so it is in our interest and I think it is in the interest of the contractor." The calculation change is aimed at cutting the cost of subcontracts, which was inflated by some oil companies under the current deals signed with Iraq, Ameedi said. "We will deduct the cost of subcontracts from the total production and the remaining production will pay remuneration for it," he told reporters on the sidelines of the roadshow. "If that share of production is less, remuneration of the contract will be affected negatively, and if it is high, they will get more remuneration," he said. "It coincides with the idea of production sharing in this sense only. That there would be 'cost oil' but there would not be 'profit oil'."