Iraq fails to sign contracts with global oil majors

AFP
Monday, June 30, 2008

BAGHDAD (AFP) - Iraq said on Monday that it had failed to sign technical support deals with global oil majors hoping to cash in on boosting the war-torn country's extensive but underexploited oilfields.

Iraq is still negotiating with Shell, BP, ExxonMobil, Chevron and Total, and a consortium of other smaller oil companies, to develop six oil blocks and two gas fields, Oil Minister Hussein al-Shahristani told a press briefing.

"We did not finalise any agreement with them because they refused to offer consultancy based on fees as they wanted a share of the oil," he said.

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"The TSAs (technical support agreements) are only simple consultancy contracts to help us raise the production during the interim period" before the ministry enters into long-term contracts to develop the oil and gas fields.

The widely expected arrangement was to pave the way for global energy giants to return to Iraq 36 years after Saddam Hussein threw them out, and was seen as a first step to access the earth's third largest proven crude reserves.

The head of British-Dutch oil company Shell nevertheless said he hoped to sign a deal with Baghdad in the next few weeks.

"I hope it (a deal) is within weeks and not months," chief executive Jeroen van der Veer told reporters on the sidelines of the World Petroleum Congress, one of industry's biggest events.

The head of Spanish oil group Repsol YPF, Antonio Brufau, added that "many things have to be clarified before signing in Iraq."

Last week, oil ministry spokesman Asim Jihad told AFP that it would sign the support contracts on Monday and award longer-term deals to 41 other energy companies.

"We chose 35 companies of international standard, according to their finances, environment and experience, and we granted them permission to extract oil," Jihad said.

Six other state-owned oil firms from Algeria, Angola, Pakistan, Thailand, Turkey and Vietnam have also been selected to compete for extraction deals.

Iraq wants to ramp up output by 500,000 barrels per day from the current average production of 2.5 million bpd, about equal to the amount being pumped before the US-led invasion in March 2003.

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