Iraq War Not About Oil Not!

All I can say is WOW. Who would have thought it would be about oil.

Iraq open door to foreign oil firms

From correspondents in Baghdad
July 01, 2008 06:07am

Article from: Reuters

IRAQ opened its giant oilfields to foreign firms today, putting British and US companies in pole position five years after US-led troops invaded the country to oust Saddam Hussein.

The move to invite bids for the development of Iraq's largest producing fields should mark the return of the oil majors, whose cash and expertise Iraq needs to restore its oil infrastructure that has been hard hit by sanctions and war.

But any awards to US and British firms could anger opponents of the invasion, who have said the 2003 war was designed to give Western oil companies control over Iraqi oil reserves. US and British officials have denied the charges.

By allowing international firms to help raise output at its key producing oil fields, the Iraqi government is breaking with the policy of major oil-producing neighbours such as Saudi Arabia, Kuwait and the United Arab Emirates where national firms keep tight control of foreign investment in their oil sectors.

"The six oilfields that have been announced today are the backbone of Iraq's oil production," Oil Minister Hussain al-Shahristani said.

"With its massive proven reserves, Iraq should not stay at its current level of production. Iraq should be the second or third largest oil-producing country."

Mr Shahristani listed the fields as Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and Maysan - which comprises three separate fields: Bazargan, Abu Gharab and Fakka.

The oil ministry said they were open for long-term development contracts. Iraqi has prequalified 41 foreign firms.

Mr Shahristani said he hoped contracts could be signed next June to raise output by a combined 1.5 million barrels per day at those fields.

He said that Iraq aimed to raise output to 4.5 million bpd by 2013 from the current 2.5 million bpd.

He said any firm that wanted to bid must open an office in Baghdad. Currently, few foreign companies have any presence in Iraq because of the security situation.

Julian Lee, senior energy analyst at London's Centre for Global Energy Studies, said Iraq was a bit like Russia in the early to mid 1990s.

"No matter how risky you think it is, as an individual company you can't afford to be the only major international player that isn't interested," he said.

Iraq said last week it also hoped to sign six short-term oil technical support contracts during the next month.

But Mr Shahristani, showing frustration, said talks on deals that were supposed to quickly boost output at fields by utilising the technical expertise of majors were still going on.

He said the firms were reluctant to sign the technical support contracts because they would offer their advice from abroad and preferred to be hands on with the fields.

"We are losing time," Mr Shahristani said.

Taken together, the short-term and long-term contracts should open the door to major foreign involvement in the OPEC member's oil sector for the first time in nearly four decades.

Iraq's proven reserves, at 115 billion barrels, are the world's largest after Saudi Arabia and Iran. Deputy Prime Minister Barham Salih said in April as-yet-unproven reserves could make the total as much as 350 billion barrels.

The short-term technical deals, each worth about $US500 million ($520 million), are aimed at lifting output at Iraq's largest producing fields by a combined 500,000 barrels a day.

Five of the short-term deals that have been under discussion are with Royal Dutch Shell; Shell in partnership with BHP Billiton; BP; Exxon Mobil; and Chevron in partnership with Total.