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Iraq seeking help to develop oil Iraq seeking help to develop oil
(19 minutes later)
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.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 increase production by half a million barrels. Iraq is seeking external help to boost output from six key oil fields and has attracted interest from leading US, Asian and European producers.
Iraq is also seeking external help for the long-term growth of key oil fields. Oil production is currently at its highest since the 2003 invasion.
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. But political wrangling has so far prevented agreement over who should agree deals and how income is shared.
Political problemsPolitical problems
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.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.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 These fields were chosen because their production can be raised in a short time Hussain al-Shahristani, Iraq 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.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. Production currently totals 2.5 million barrels a day and Iraq hopes to increase output to 2.9 million barrels by the end of 2009.
Iraq hopes to increase output to 2.9 million barrels by the end of 2009 by using the technical know-how of foreign firms. Iraq confirmed on Monday that it was seeking foreign investment to develop six of its most important oil fields - Rumaila, Kirkuk, Zubair, West Qurna, Bai Hassan and Maysan.
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. It has identified 35 foreign firms which are qualified to tender for the contracts, to be awarded next summer.
An announcement on these contracts, reportedly worth about $500m each, is expected next month. Amid concerns about foreign firms reaping huge financial rewards, Baghdad said the successful firms would have to have an Iraqi partner and give 25% of the value of contracts to locally owned firms.
Separately, Iraq is seeking foreign investment to develop six of its most important oil fields - Rumaila, Kirkuk, Zubair, West Qurna, Bai Hassan and Maysan. Significance
Contracts for these deals are expected to be announced early next year. The BBC's Nicholas Witchell in Baghdad said the move was highly significant since it paved 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 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. "These fields were chosen because their production can be raised in a short time and at a low cost," explained oil minister Hussain al-Shahristani.
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. Iraq's courting of foreign investment is at an early stage but has already attracted controversy due to claims that some contracts might be awarded without competitive bids.
"The oil sector cannot be developed by Iraqi people alone," Dr Mohammad Bahr Al-Uloom, told the BBC. Reports suggested that officials were hoping to announce short-term production agreements - an interim measure pending political agreement over a national oil law - with Exxon Mobil, Shell, Total and BP on Monday.
"At the same time we need a framework to preserve the interests of the Iraqi people." But ministers gave no details of these contracts, reportedly worth about $500m each, stressing instead that no firms would receive "preferential treatment".
Greater 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.
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.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. 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.
Officials hope the presence of multinational oil firms in Iraq will stimulate more foreign investment in Iraq, our correspondent added.
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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