BAGHDAD (Thomson Financial) - Iraq on Thursday said it would be guided by
the principle of competition when awarding contracts to global energy companies
hoping to cash in on the country's vast oil and gas fields.
On Monday the oil ministry threw open six oilfields and two gas fields for
international bidding by 41 companies, the contracts for which are expected to
be signed in June next year.
Government spokesman Ali al-Dabbagh said Baghdad would award the service
contracts only on the basis of competition.
"There is no intention of signing oil deals outside the law. The principle
of competition will be applied. There is no preference to any company," he said.
The oil contracts, which are service contracts only, pave the way for energy
firms based abroad to return to Iraq 36 years after Saddam Hussein threw them
out.
The move is seen as the first major step towards developing the world's
third largest oil reserves at a time of skyrocketing global crude oil prices.
Separately, Iraq is still negotiating consultancy contracts with some
multinational firms to source their services before the long-term deals are
finalised.
These companies are Royal Dutch Shell, BP, Exxon Mobil, Chevron and Total,
and a consortium of other smaller oil companies.
Iraq wants to ramp up output by 500,000 barrels per day (bpd) from the
current average production of 2.5 million bpd, about equal to the amount being
pumped before the U.S.-led invasion in March 2003.
However, political infighting over how oil revenue should be shared has
slowed the process.
Crucially, the passing of the hydrocarbon law aimed at governing
profit-sharing and foreign agreements has yet to be passed by parliament.
Exports of 2.11 million bpd currently form the bulk of the war-torn nation's
revenues, and the oil ministry is keen to raise capacity over the next five
years to 4.5 million bpd.
Iraq has crude reserves estimated at 115 billion barrels, but it is sorely
lacking in high-tech infrastructure following years of crippling UN sanctions
imposed after Saddam invaded Kuwait in 1990.
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