Foreign companies bid to boost Iraqi oil production
Four U.S. firms among those selected to bid for contracts to boost the production of eight underperforming oil and gas fields.
BAGHDAD -- Iraq's oil minister today announced the start of bidding by foreign companies for contracts to boost the production of eight underperforming oil and gas fields.
The contracts, to be executed in about 18 months, would open Iraq's oil fields to foreign companies for the first time since former dictator Saddam Hussein nationalized foreign concessions in the 1970s.
Oil Minister Hussein Shahristani said 35 companies had been selected to bid. Among them were seven from the U.S. and four each from China and Japan.
The bidding will proceed though parliament has not yet ratified a national oil law to regulate foreign contracts. The measure has been stalled by disagreements over how to divide oil revenues among Iraq's regions.
Shahristani said there has already been too long a delay in upgrading depleted fields, which require new technology and foreign expertise to restore capacity.
The work would nearly double production from existing fields to 4.5 million barrels a day by 2013, he said.
Shahristani had sharply criticized the Kurdish regional government for signing deals with foreign companies to develop new fields in the oil-rich north.
At a news conference today, he contrasted the contracts offered by the national government in Baghdad with those in Kurdistan, which allow the foreign companies to work for a percentage of profits.
Shahristani said the national government was only offering service contracts to upgrade existing fields. Development of new resources would come later.
To protect Iraqi interests, Shahristani said, companies bidding would be required to set up offices in Baghdad, and those winning the bids would be required to open branches in Baghdad and to establish partnerships providing Iraqi companies at least a 25% ownership share.
The 35 companies were chosen from 120 that submitted qualification documents based on a rating system that included technical, financial and legal tests.
But any firm that has signed agreements with Kurdistan was automatically disqualified.
One disappointed potential bidder learned this after the news conference when he asked an oil official why his company, IGI Group, was spurned.
"I received your papers, but I didn't look at them," Abdul Hahdy Ameedi, deputy director general for licensing told the man. "If you get out of your contract with Kurdistan we will consider you."
doug.smith@latimes.com
