Saturday, January 26, 2008
Iraqi oil minister: best bid prevails in race for unexplored fields (11:01 a.m.)
DAVOS, Switzerland (AP) - An Iraq at peace may be capable of
pumping substantially more than 5 million barrels of crude a day -
and the world's big oil companies want to be part of the action if
and when it does.
With violence down and production up, Iraq says output reached
nearly 2.5 million barrels a day last month - about half the
capacity eventually foreseen by many analysts. But Iraqis are even
more bullish.
"We expect to take Iraq to between 6 and 8 million barrels a day
... in about 10 to 12 years," Oil Minister Hussein al-Shahristani
told The Associated Press Friday on the sidelines of the World
Economic Forum, saying most of the extra production would be coming
from "green fields" identified but not yet exploited.
Such estimates are definitely on the high end. Still, the big
players appear to be believers in the future of Iraq as perhaps the
Middle East's last oil frontier - and are already trying to gain the
best toehold in a contest that in part pits Russia's state-linked
sector against major oil companies from the United States and
Europe.
"All the majors and the minor oil companies have shown a great
interest including the Russians, obviously," al-Shahristani said as
he took a break from meeting key figures in the industry for an
interview in the lobby of his hotel at this Swiss Alpine resort.
"They are all very keen to come and work in Iraq."
Al-Shahristani's view of his country as "the place ... for
future work in the industry" is shared by many in the industry.
Saudi Arabia, the Middle East petroleum powerhouse, now produces
about 9 million barrels a day and will likely remain OPEC's most
prolific source of crude for decades of come.
But there is intense interest in expanding other sources of
supply because of concerns that the oil flow from Iran, the
organization's No. 2 producer, could be interrupted if tensions with
the U.S. over Tehran's nuclear program turn into conflict.
This is where Iraq comes in, with potential for development and
oil reserves that one company last year revised upward to more than
an estimated 200 billion barrels. That estimate, by the consulting
firm IHS Inc., is double previous ones which already qualified the
country as holder of the world's third-largest reserves.
Ehsan ul-Haq, chief analyst at PVM Oil Associates in Vienna,
Austria, said the general perception in the industry is "that there
are much more possibilities in Iraq than anywhere else in the Middle
East."
So who will get the nod? Al-Shahristani says the playing field is
level.
"We have been telling everybody ... that ... awarding contracts
is going to be (a) transparent, public competition, according to the
international industrial norms," he said.
Still considering America's huge footprint in the country, the
U.S. majors might have the advantage. And that could deal a setback
to Russia's drive to take a bigger share of the energy pie - most
recently demonstrated by lucrative pipeline deals and company
purchases in the Balkans by gas giant Gazprom.
Al-Shahristani denied any planned favoritism.
"We are not going to look at the nationalities of the
companies," he said, adding that U.S. firms hoping to win bids
"have to offer the Iraqis the highest return."
"They have to abide by the rules of the game like everybody
else," he said.
But Ul-Haq said sentiment is that "the American companies will
have the advantage in Iraq, even though the Russians have been
trying to improve their relations with the government."
Complicating any bidding are disputes over a proposed oil and gas
law, meant to divvy up those resources among Shiites, Sunnis and
Kurds - one of the benchmarks sought by the United States to achieve
national reconciliation.
The Iraqi Cabinet approved a U.S.-backed draft bill last February
and forwarded it to parliament. But parliament, citing legal
technicalities, sent it back to the Cabinet. The measure has been
bogged down in negotiations ever since.
With national legislation stalled, Kurdish authorities have
signed more than a dozen contracts with foreign companies over the
objections by Oil Ministry officials in Baghdad, who consider the
deals illegal.
Bidding procedures are going ahead nonetheless, with Iraq giving
international oil companies until Feb. 18 to submit their documented
interest in participating in the development of some of the
country's most prized oil fields.
The Iraqi government recently warned foreign oil companies that
deals signed with the Kurds were illegal and on Friday, the Iraqi
oil minister - with an indirect nod toward the Kurds - cautioned all
factions to view the resource as a shared good.
"Oil can either unite Iraqis into a prosperous democratic
society, or can split Iraqis into warring factions, trying to lay
their hands onto whatever oil they can get," he said.
"Oil is the wealth of all the nation and it should be
distributed equitably to all the regions of the country." (AP) |
