By SAMEER N. YACOUB, Associated Press Writer Mon Jun 30, 4:15 PM ET
BAGHDAD - The Iraqi government opened six oil fields to international bidding Monday as the nation attempts to boost daily production by 60 percent.
The potential participation of big Western companies like BP, Chevron, Exxon Mobil, Shell and Total SA in Iraq's oil industry has been criticized in recent weeks following published reports that several were close to signing no-bid contracts with the Iraqi government.
There was an immediate outcry over perceptions that the U.S. did invade Iraq to gain access to its massive oil reserves and there was no announcement of contracts Monday by Oil Minister Hussain al-Shahristani.
He did, however, name 35 companies that would be qualified to bid on service contracts for the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan.
"These fields were chosen because their production can be raised in a short time and at a low cost," said al-Shahristani.
All of the fields are currently producing oil, and al-Shahristani said the new contracts would raise Iraq's production by 1.5 million barrels per day. Iraq currently produces 2.5 million barrels per day and hopes to raise that to 4.5 million by 2013.
The Bush administration indicated last week that it had no plans to interfere with negotiations between Iraq and Western oil giants and on Monday, the State Department said Iraq was acting alone.
"There is no U.S. government involvement in any decision in any way being taken in any form by the Iraqi oil ministry or any other ministry on these fundamental issues," said spokesman Tom Casey. "These are decisions that a sovereign Iraqi government and sovereign Iraqi officials are making on their own."
Casey likened the role of the U.S. "technical support people" to that of a lawyer whose client wants to draft a will. The client makes the decisions about who gets what and the lawyer provides advice and expertise, Casey said.
Major oil companies also distanced themselves from talk of no-bid deals that provide access to Iraqi oil.
"We have been providing services to Iraq from outside the country for a number of years," Robert Wine, a spokesman for BP. "We submitted a study of the Rumeila fields several years ago and if the discussions do lead to deal, they will focus on the technical services in that report. We need to clarify — this is not about access to the country's oil resources, or exploration. It's a management contract, to provide technical resources."
Greater oil production is key to rebuilding Iraq's devastated infrastructure and delivering energy to the country.
But the lack of security and the absence of a new legislation to manage the industry have hampered development of the oil industry.
A reduction in violence in recent months has allowed the country to boost production to its highest level since the U.S.-led invasion in 2003.
At the same time, record oil prices that surpassed $143 per barrel Monday have made Iraq's vast untapped reserves even more tempting to foreign companies. Iraq has an estimated 115 billion barrels of oil reserves and some 112 trillion cubic feet of natural gas, according to the government.
Al-Shahristani said Monday that the country would also open up the natural gas fields of Akkaz and Mansouriyah for bidding.
Every company involved in the bidding process must have an Iraqi partner and must give 25 percent of the value of the contract to Iraqi companies, said al-Shahristani.
Western participation in Iraq's oil industry, especially by American companies, has been a contentious issue ever since U.S.-led forces toppled the regime of Saddam Hussein.
Democratic Sens. Chuck Schumer of New York, John Kerry of Massachusetts and Claire McCaskill of Missouri, last week asked Secretary of State Condoleezza Rice to try to block any oil deals.
Until Baghdad agrees on how to divide the nation's oil revenues, the presence of Western companies — including U.S.-based Exxon Mobil — will heighten tensions among Iraq's feuding sectarian groups "at the same time that American service members are fighting night and day to reduce the levels of violence," they wrote.
"This is clearly a matter of national security, which we believe should trump any and all commercial interests," the senators added.
On Monday The New York Times reported that a small U.S. State Department team helped draw up contracts between the Oil Ministry and the five major oil companies. The newspaper quoted a senior State Department official as saying the team provided technical support to an understaffed Iraqi ministry.
Iraqi government spokesman Ali al-Dabbagh denied the country had ever considered a no-bid process, saying "there was never any intention to award the contracts without a tender."
Al-Dabbagh denied American influence on the Iraqi government's oil decisions, saying "politics does not come into this."
"There is no preferential treatment for anyone, no matter who," said al-Dabbagh.
___
Associated Press Writer Meera Selva in London and AP Diplomatic Writer Anne Gearan in Washington, D.C., contributed to this report
Posts: 2321 | Registered: Aug 2006
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posted
Rather an interesting situation considering we have all those troops there probably protecting those fields.
Somehow i do not think anything that happens with those bids will help this country at all to reduce gas prices.
Where does all that money go that comes out of those oil wells that are pumping now? Those figures equate to a pretty large sum of money especially since there is not a dictator in place collecting all that money.
Then you add $32 billion in business and farms and $33 billion in goods and services and yet the per capita income in Iraq is around $1500 in 2006.
Something appears to stink and for some odd reason i do not think any of that money helps pay for the war.
Posts: 3875 | From: ca. | Registered: Jul 2005
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posted
my undersrtanding is that these contracts are for services only.
the oil money goes into the Iraqi govt.
apparently some of the Kurds have written contracts on their own Official Calls Kurd Oil Deal at Odds With Baghdad
By ALISSA J. RUBIN and ANDREW E. KRAMER Published: September 28, 2007
BAGHDAD, Sept. 27 — A senior State Department official in Baghdad acknowledged Thursday that the first American oil contract in Iraq, that of the Hunt Oil Company of Dallas with the Kurdistan Regional Government, was at cross purposes with the stated United States foreign policy of strengthening the country’s central government.
“We believe these contracts have needlessly elevated tensions between the K.R.G. and the national government of Iraq,” the official said, referring to the Kurdistan Regional Government. The official was not authorized to speak for attribution on the oil contract. Hunt Oil, a closely held company, signed a production-sharing agreement with the Kurdistan Regional Government this month. The company’s chief executive and president, Ray L. Hunt, is a close political ally of President Bush and serves on the Foreign Intelligence Advisory Board.
Hunt Oil and the Kurds signed the contract after the Kurdish government passed a regional oil law in August. But it is unclear how the regional law will interact with a national oil law under discussion in the Iraqi Parliament. http://www.nytimes.com/2007/09/28/world/middleeast/28iraq.html?ref=world
it's still not clear to me how this affected the Iranian-Turkish alliance to invade the Kurdish regions a few weeks ago...
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note that this is a Kurdish paper: Tuesday, 01 July 2008, 07:02 EDT International expert finds Kurdistan govt oil contracts "in the national interests"
International expert finds KRG oil contracts "far superior" for Iraq than model contract proposed by Baghdad federal oil ministry.
Federal Ministry of Oil model "would be disastrous for Iraq"; would lose trillions of dollars for Iraqi people.
The Kurdistan Regional Government of Iraq (KRG) Monday announced the publication of a fact-finding report by the internationally renowned expert on petroleum fiscal regimes, Dr Pedro van Meurs, which finds that the Production Sharing Contract model currently applied by the KRG (KRG-PSCs) is immensely better for Iraq's national interests than the Risk Service Contracts (EDP-RSCs) that have been proposed by the Ministry of Oil (MOO) in Baghdad.
In his report 'Comparative analysis of Ministry of Oil and Kurdistan fiscal terms as applied to the Kurdistan Region', prepared for leading international law firm Clifford Chance at the request of the KRG, Dr van Meurs warns, "If profitability to the investors is not aligned with the goals of the government, very significant losses can occur to the value of government revenues". http://www.kurdishglobe.net/displayArticle.jsp?id=5426AECE36C5B0DA4BB38FDAE04463 5D
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Earlier in the occupation of Iraq, American advisers supported the Oil Ministry’s effort to dismiss claims by the Russian company Lukoil to a large Saddam Hussein-era deal. The ministry maintains that the Hussein government canceled the contract three months before the invasion. Lukoil says the attempt to cancel the deal was illegal because Mr. Hussein had not appealed to international arbitration first, as required in the contract terms.
posted
I get where i don't want to read any more junk about Iraq and put 2 and 2 together considering we have all those American troops there in harms way.
Posts: 3875 | From: ca. | Registered: Jul 2005
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