Iraq’s Ministry of Oil has preliminarily signed contracts to develop 13 oil and gas exploration blocks and fields. The ministry announced that these exploration agreements could potentially increase production by 750,000 barrels of crude oil and 850 million standard cubic feet of gas.

Oil sector officials indicated that Iraq is particularly focused on this sixth licensing round to boost natural gas production, which it intends to use to power electricity plants that currently rely heavily on imported gas from Iran.

Oil Minister Hayan Abdul Ghani stated that the increase in gas production could allow for greater flexibility in supplying gas to power plants.

The contracts, which were initially signed during a bidding round held in May, were predominantly awarded to Chinese companies. An official from the Ministry of Oil, who attended the signing ceremony, mentioned that these would be profit-sharing contracts, offering a share of revenues after deducting royalties and cost recovery expenses.

The official added, “We have adopted profit-sharing contracts instead of service contracts to encourage and attract more investment in Iraq’s energy sector.”

Traditional technical service contracts offer fixed fees for the work performed, which is likely less profitable for foreign investors compared to the terms of profit-sharing contracts.

In the May bidding round, which included 29 oil and gas projects, Chinese companies secured ten of the oil and gas fields and exploration blocks that were offered.