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Iraq seeking help to develop oil Iraq seeking help to develop oil
(about 1 hour later)
Iraq is set to announce a series of contracts with foreign oil companies in an effort to boost output of its key export commodity. Iraq has begun the process of opening up its oil industry to foreign investment in an effort to boost output of the country's key income earner.
US and European firms will be asked to provide technical expertise to help Iraq increase daily production by up to half a million barrels. US and European firms will be asked to provide technical expertise to increase production by half a million barrels.
Output is at its highest since the 2003 invasion but huge investment is needed to modernise its oil infrastructure. Iraq is also seeking external help for the long-term growth of key oil fields.
Iraq has reserves of about 115 billion barrels, the world's third largest. Output is at its highest since the 2003 invasion but political wrangling has so far prevented agreement over who should agree deals and how income is shared.
Reuters reported that foreign firms would be asked to assist in the development of six oil fields - Rumaila, Kirkuk, Zubair, West Qurna, Bai Hassan and Maysan. Political problems
Reports have suggested that firms such as Exxon Mobil, Shell, Total and BP will be involved although there has been no official confirmation of the identity of Iraq's chosen partners. Iraq has reserves of about 115 billion barrels, the world's third largest, and the development of its oil facilities are essential to helping to fund the country's long-term reconstruction.
But huge investment is needed to modernise its infrastructure and Iraq's Parliament has so far failed to agree a legal basis for who should agree contracts and how the country's oil should be shared among different groups.
We need a framework to preserve the interests of the Iraqi people. Dr Mohammad Bahr Al-Uloom, former oil minister The challenge of Iraqi oil
The authorities in Baghdad have long been at odds over the issue with the semi-autonomous Kurdistan regional government in the north of the country.
Production currently totals 2.5 million barrels a day, the highest since the 2003 US-led invasion of the country.
Iraq hopes to increase output to 2.9 million barrels by the end of 2009 by using the technical know-how of foreign firms.
Reports have suggested that officials are negotiating with Exxon Mobil, Shell, Total and BP although there has been no official confirmation of the identity of chosen partners.
An announcement on these contracts, reportedly worth about $500 each, is expected next month.
Separately, Iraq is seeking foreign investment to develop six of its most important oil fields - Rumaila, Kirkuk, Zubair, West Qurna, Bai Hassan and Maysan.
Contracts for these deals are expected to be announced early next year.
The process of opening up Iraq's oil industry to foreign investment is at an early stage with the issue of lucrative contracts for exploration rights some way off.
However, Monday's announcement is significant since it paves the way for large foreign firms to re-enter a market they have been effectively barred from since Saddam Hussein nationalised Iraq's main oil company in 1972.
"The oil sector cannot be developed by Iraqi people alone," Dr Mohammad Bahr Al-Uloom, told the BBC.
"At the same time we need a framework to preserve the interests of the Iraqi people."
Greater stabilityGreater stability
The reduction in violence in much of the country over the past year has helped the oil sector achieve greater stability.The reduction in violence in much of the country over the past year has helped the oil sector achieve greater stability.
Production currently totals 2.5 million barrels a day, the highest since the 2003 US-led invasion of the country.
On Saturday, Iraq announced it was setting up a third state-owned oil business to expand production from the Maysan region in the south east of the country.
Iraq hopes to increase output to 2.9 million barrels by the end of 2009 and has more ambitious plans for developing the industry to help fund long-term reconstruction.
With oil prices at record levels and, according to many experts, set to rise further, the prospect of increased output from Iraq will provide some comfort amid growing worries about whether global supplies can meet long-term demand for oil.With oil prices at record levels and, according to many experts, set to rise further, the prospect of increased output from Iraq will provide some comfort amid growing worries about whether global supplies can meet long-term demand for oil.
On Saturday, Iraq announced it was setting up a third state-owned oil business to expand production from the Maysan region in the south east of the country.
The BBC's Nicholas Witchell in Baghdad said officials hoped the presence of firms of such stature would help not only make the industry more productive but encourage other foreign businesses to invest in Iraq.The BBC's Nicholas Witchell in Baghdad said officials hoped the presence of firms of such stature would help not only make the industry more productive but encourage other foreign businesses to invest in Iraq.
Are you living in Iraq? Do you think this will encourage other companies to invest in Iraq? What is your reaction to the plans? Send us your comments using the form below.Are you living in Iraq? Do you think this will encourage other companies to invest in Iraq? What is your reaction to the plans? Send us your comments using the form below.
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