Baghdad is revolutionizing its approach to working with international oil companies by shifting towards profit-sharing agreements, marking a significant departure from decades of traditional contracts. The goal is to attract more capital to Iraq’s thriving hydrocarbon industry, as revealed by sources.
In a groundbreaking move, the Iraqi Ministry of Oil recently signed 13 preliminary agreements with oil corporations to develop oil and gas exploration blocks and fields. By offering profit-sharing contracts with improved conditions over technical-service contracts, Iraq aims to enhance its oil and gas production through the fifth and sixth licensing rounds.
These profit-sharing models, as explained by an official from the Oil Ministry, will provide foreign companies with a portion of revenue after deducting exploration and extraction costs. This strategic shift is designed to entice additional investment compared to traditional technical service contracts, ultimately making production-sharing conditions more lucrative for all parties involved.
Overall, Iraq’s transition to profit-sharing agreements represents a progressive step towards further development and growth in its oil and gas sector, demonstrating a willingness to adapt to changing industry standards.