Oil giants lining up for slice of Iraqi resources
2 days ago
WASHINGTON (AFP) — Global oil giants are preparing to return to Iraq after being chased out of the oil-rich country 36 years ago by the late dictator Saddam Hussein, reports said Thursday.
Shell, BP and ExxonMobil are all eagerly lining up to tap into the resources of the Middle Eastern nation with a deal due to be signed on June 30, the New York Times said quoting oil companies and a US diplomat.
"The deals ... will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations," the Times said.
Iraqi Oil Minister Hussein Shahristani told the Middle East Economic Survey earlier this month that the government was ready to sign Technical Support Agreements with foreign oil companies by the end of June to add an eventual 500,000 barrels per day (bpd) in output capacity.
MEES said five consortia were in talks with the Iraqi government for the two-year contracts.
The agreements cover Kirkuk field (Shell), Rumaila (BP), Al-Zubair (ExxonMobil), West Qurna Phase I (Chevron and Total), Missan province development (Shell and BHP Billiton) and the Subba and Luhais fields (Anadarko, Vitol and the UAE's Dome), MEES said.
ExxonMobil, Shell, Total and BP or their predecessors all had stakes in the Iraq Petroleum Company, which held a monopoly on the country's oil resources from 1925 to 1961.
In April, the French company Total admitted there were ongoing discussions with Chevron on a deal to develop West Qurna.
"I can confirm that Chevron and Total are in joint discussions with their ministry of oil regarding a technical services contract," a Chevron spokesman said Thursday. "The objective would be to increase output."
ExxonMobil for its part has already voiced an interest in participating in the development of Iraq's oil resources.
"If the Iraqi government decides it wants international oil companies to partner with them in developing their resources, ExxonMobil would be interested in participating," the company said.
Iraqi Deputy Prime Minister Barham Saleh said last month that his country was the world's largest ever emerging market, with foreign companies lining up to invest in the war-ravaged economy.
Iraq was predicting 70 billion dollars in oil revenue this year, with reserves that "could well exceed" 350 billion barrels, and with the International Monetary Fund slating eight percent growth in 2008.
The technical support assistance deals are a bridging contract designed to fast-track foreign oil involvement in Iraq, while a new hydrocarbons law has yet to be passed by the Iraqi parliament.
Iraq is also working to launch an upstream bidding round this year that, unlike the TSAs, is expected to require the prior passage of the new hydrocarbons law.
"We are working on a development round. We have a draft contract prepared. We are working towards having it ready for July," Shahristani said.
The news that a deal is in the offing is likely to inflame debate about the origins of the Iraq war, which many critics have claimed was all about the country's oil reserves.
But US Secretary of State Condoleezza Rice said Thursday the US government was not involved in the no-bid oil contracts.
"The United States government has stayed out of the matter of awarding the Iraq oil contracts. It's a private sector matter," Rice told Fox news network.
But she did stress that the likely awarding of contracts "demonstrates that it's starting to get interesting in Iraq and recognizes the potential for Iraq to become an even more major oil supplier."
"That's really a good sign. It will be a good sign if Iraq can increase oil production because, of course, the supply and demand of oil is a major concern to all of us."