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Iraq Opens Bidding For 8 Oil, Gas Fields

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The Associated Press

The Tampa Tribune

Published: July 1, 2008

BAGHDAD - BAGHDAD - Iraq opened international bidding for eight enormous oil and gas fields, paving the way for major investments in a nation with one of the world's largest petroleum reserves.

If the contracts are approved, they could mark the biggest foreign stake in Iraq since the industry was nationalized more than 30 years ago.

That could be good news with the price for a barrel of oil breaching $143 for the first time ever on Monday, but there are concerns that a dominant role for Western firms such as Shell, BP, Exxon Mobil and Total could feed perceptions that U.S.-led forces toppled Saddam Hussein to grab the country's natural resources.

During a news conference Monday, Oil Minister Hussain al-Shahristani named 35 companies that would qualify to bid on service contracts for eight oil and gas fields. The firms included seven from the United States.

Al-Shahristani said the companies would be invited to bid on the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan; and the natural gas fields of Akkaz and Mansouriyah.

"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 oil fields are currently producing crude, 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 introduction of 1.5 million barrels of oil each day would likely be enough to move the price for a barrel downward, but analysts are not convinced, given the deterioration of the Iraq's infrastructure and potential instability, that it is realistic.

"I'm pretty skeptical of that figure," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "Amount is one thing, timing is another. They still need to upgrade their infrastructure and while things have stabilized, I think you're assuming a best-case scenario on security and other issues."

Iraq has been able to boost production to its highest level since the U.S.-led invasion in 2003 because of a reduction in violence.

Iraq's oil minister said the country needs help from foreign firms to boost production further because some of its oil fields "suffer from old age and need modern technology to check their deterioration."

Foreign firms have been anxious to tap Iraq's estimated 115 billion barrels of oil reserves.

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