Baghdad’s New Contract Model: Can It Reverse IOC Exodus?

10 Mar 2023 Issue: 66 / 10 By: Yesar Al-Maleki

Iraq is preparing a new gas-focused licensing round to be held under a new upstream contractual model that it hopes will prove more attractive to IOCs. But with majors focused on greening their portfolios, has Iraq missed the bus?

Baghdad’s long-delayed ratification of the fifth licensing round (LR5) contracts on 21 February (MEES, 24 February) finally turned the page on a five-year long saga of legal disputes that inhibited development plans for the six awarded blocks. More importantly, signing the LR5 contracts has now codified the Oil Ministry’s new upstream contractual model first introduced in 2018.

The Exploration, Development and Production Contract (EDPC, or DPC for discovered and undeveloped fields) has been touted by Baghdad as an improvement over its much-decried Technical Service Contracts (TSCs). The EDPC’s fiscal terms aim to reduce the risk to IOCs of investing in new exploration blocks. Hot on the heels of LR5 ratification, Prime Minister Mohammed al-Sudani wants the ministry to imminently launch another bid round focusing on developing the gas potential of Iraq’s vast under-explored acreage. (CONTINUED - 2018 WORDS)