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Sat 29 Aug 2009 11:33 PM

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Cairn yet to decide on bidding for Iraq oil round

UK explorer's chairman says company may consider partners ahead of possible auction bid.

UK oil explorer Cairn Energy said on Saturday it may rope in partners if it decides to bid for blocks offered in the latest auction round of Iraq oil fields.Cairn Energy is among 45 of the world's major energy companies that have qualified to compete in Iraq's next bidding round for contracts to develop its vast oil fields, the second such auction since the US-led invasion in 2003.

"If we were to go there either as a Plc or Cairn India or a combination, we might take partners," Bill Gammell, Chairman of Cairn Energy, told a news conference in India.

But he said the board of the company was yet to take a call on whether to participate in Baghdad's latest oil round.

"Iraq is a country that has huge potential, we all know that. Cairn's board has not taken a decision on whether we will participate. We don't know what the commercial terms are," Gammell said.

Gammell added that terms of the first round were "very very tough" when Baghdad awarded only one of the eight fields auctioned, offering such a low return on investment that most oil firms left the table despite having spent hundreds of millions of dollars in the pursuit of Iraq's vast oil wealth.

Iraq is offering 10 oil and gas fields at auction in late November, providing another chance for international energy companies to compete for access to the world's third-largest oil reserves.

Iraqi officials on Tuesday said Baghdad will seek $1.2 billion in non-recoverable signature bonuses for deals made in a second round of bidding for oil deals, and will take a quarter stake in the new hydrocarbon contracts.

Meanwhile, Indian Prime Minister Manmohan Singh on Saturday opened the tap for production of oil from Mangala field in a block in western Rajasthan. The block is operated by Cairn India, a unit of Cairn Energy.  (Reuters)

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