The China TSA For Ahdab Oilfield.

The Maliki government on Sept. 1 said it had approved a $3 bn TSA with CNPC in a move which could signal the shape of future oil deals. Government spokesman Ali al-Dabbagh said: "The cabinet has approved a service contract to develop and produce the Adhab oilfield between the [Iraqi] Northern Oil Co. and a Chinese company, according to terms initialled by both sides". (CNPC originally had signed a PSA for this field in 1997. But Baghdad not has dropped the PSA option, limiting deal to service contracts under which the company gets a flat fee for its work and has no share of the profits or reserves). Al-Ahdab, 160 km from Baghdad, is expected to produce about 100,000 b/d.

CNPC's TSA is being watched closely by IOCs seeking to secure the most profitable terms they can in any contracts brokered with Baghdad. IOCS generally dislike TSAs. However, advocates of TSAs have argued that oil companies take on very little risk in Iraq and should therefore not be rewarded with more than a flat fee.