The Arizona Republic: Companies champ at Iraqi oil bits: Fertile ground for expansion, new contracts: “The world's three biggest integrated oil companies - BP PLC, ExxonMobil Corp. and Royal Dutch/Shell Group of Cos. - recently struck cooperation or training deals with Iraq.” (ShellNews.net) 27 March 05

Laurence Frost

Associated Press

Mar. 27, 2005 

PARIS - As Iraq's political factions move closer to forming a new government, the world's oil leaders are dusting off their Baghdad Rolodexes with an eye toward lucrative production agreements.

Through 15 years of conflict and sanctions, major oil companies never lost sight of Iraq's enormous proven reserves: the world's second-largest after Saudi Arabia.

Efforts to form the nation's first elected government in more than half a century are making the prospect of major contracts more real, even if that government still could be more than a year away.

The world's three biggest integrated oil companies - BP PLC, ExxonMobil Corp. and Royal Dutch/Shell Group of Cos. - recently struck cooperation or training deals with Iraq. France's Total SA regularly invites Iraqi engineers to Paris for training.

"It's a way to maintain contact and get the oil officials to know about them," said Issam Chalabi, former Iraqi oil minister who fled Saddam Hussein's regime in 1991.

Speaking from Jordan, where he works as a consultant, Chalabi said 20 companies have offered Iraq's interim government training for oil personnel, free geological studies or other assistance.

Oil powerhouses stayed on the sidelines as oil-services companies like Halliburton Co. were awarded billions of dollars' worth of contracts to renovate Iraqi pipelines.

The U.S.-led postwar administration and the provisional government that followed lacked the democratic or legal legitimacy to approve full-blown production deals, which guarantee companies a share of oil extracted from fields in which they invest.

Long-term contracts may have to wait until the framing of a new constitution and a second round of elections.

Iraq's crude is badly needed to fund the country's reconstruction and to feed surging global demand.

With proven reserves of 112 billion barrels, but current production of 2 million per day, "Iraq has more oilfields that have been discovered but not developed than any other country in the world," Chalabi said.

If rapid improvements are made to Iraq's damaged oil infrastructure, Chalabi sees the potential to triple output within five years.

Britain's BP agreed last month to analyze Iraqi oil ministry data about the Rumailah oilfield near the southern city of Basra, in the zone patrolled by British forces. Such studies are vital when preparing to launch drilling operations.

ExxonMobil has an agreement covering technical assistance, training and studies, while Royal Dutch/Shell won a contract in January to carry out study work on Kirkuk, a major field in the north.

Total SA negotiated production contracts for two Iraqi fields in the early 1990s but never signed them. It now argues that its 80 years of experience in Iraq could be crucial.

"Everyone knows that we've worked in Iraq, everyone knows we've conducted surveys, everyone knows that Total was born in Iraq in 1924," said Christophe de Margerie, president for exploration and production.

He dismissed suggestions that French opposition to the U.S.-led invasion could damage his company's chances.

Ibrahim Mohammed, a former geologist and London-based consultant, says that Baghdad oil ministry staff expects the major U.S. companies to win the lion's share.

"Among people who are high up in the ministry of oil and the national Iraqi oil company," Mohammed said, the feeling is that "the new government is going to be influenced by the United States."

That perspective may have been a factor in OAO Lukoil's decision in September to team up with ConocoPhillips Co. as it evaluates the 68.5 percent stake in the large West Qurna oilfield that Lukoil negotiated with Saddam's Iraq.

Lukoil is based in Russia, another country that opposed the war. The company is granting ConocoPhillips a 17.5 percent stake in the southern oilfield, giving the project a solid U.S. connection.

http://www.azcentral.com/arizonarepublic/business/articles/0327iraqoil27.html

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