New rules for oil drilling bid

Consortium 'operator' requires $10 billion capital

Conditions for companies interested in bidding for oil and gas drilling rights were approved by the Cabinet on February 6. According to the new rules, companies' subsidiaries are allowed to join one or more of the bidding consortiums as long as they meet the required criteria.

The Cabinet had approved earlier the bulk of qualifications for interested companies outlined in executive decrees prepared by the Petroleum Regulatory Authority (PRA).

The terms of reference state that consortiums must be formed of at least three companies. “One of the three firms, the ‘operator’, should have a capital of at least $10 billion,” said MP Mohamad Kabbani, head of the Parliament’s committee for energy. Each of the other companies in the consortium should have a capital of at least $500 million.

The ‘operator’ firm should also have experience in drilling at 1,500 meters below sea level, Kabbani said.

The Cabinet plans to invite interested companies to apply for a prequalification round by the end of February. The official bid for the prequalified firms will be launched on May 2nd.

More than 40 firms have already bought studies conducted by Spectrum, the U.K.-based oil and gas service provider. Several consortiums have been formed between local firms and international oil giants.