UPDATE 1-Iraq asks oil majors to shorten service contracts

By Simon Webb and Mohammed Abbas

DUBAI/BAGHDAD, July 21 (Reuters) - Iraq has asked international oil companies to revise proposals for technical service contracts worth about $3 billion that aim to boost the country's oil output by about a quarter.

The revisions could delay the signing of the six contracts -- worth around $500 million each -- until August or September, an executive at one oil company said on Monday.

Iraq's Oil Ministry said on June 24 it wanted the deals signed within a month. Oil Minister Hussain al-Shahristani has expressed frustration over delays in finalising the contracts.

But Baghdad has asked oil majors for revised proposals for contracts that will last just one year to 18 months, rather than the two years previously stipulated, executives at two of the oil companies said.

The short-term deals are being negotiated by Royal Dutch Shell (RDSa.L); Shell in partnership with BHP Billiton (BHP.AX); BP (BP.L); Exxon Mobil (XOM.N); and Chevron (CVX.N) in partnership with Total (TOTF.PA). A consortium of Vitol, Dome and Anadarko (APC.N) is negotiating the sixth contract.

The deals aim to boost oil output by 100,000 barrels per day at each of six of Iraq's largest producing oilfields, adding to current production of around 2.3 million bpd.

The contracts had called for the output boost within a year, although that target was not binding and was seen as ambitious by some of the companies negotiating.

The executives questioned how much work they could do in the shorter timeframe.

"A lot of the equipment we will need takes at least 12 months to deliver. So there is a limit to what we could do in a year," said one executive. "You have to ask the question as to how serious is the oil ministry really about these deals?"

Still, oil companies were making their revisions and preparing to resubmit proposals, executives said.

"There is a certain amount of work you can do," said one. "I think we'd rather get started than wait another year for the next round of contracts."

Iraq asked for the revisions in early July after Shahristani on June 30 laid out plans for a bidding round for longer-term development contracts at the same fields. Baghdad aims to finalise those long-term contracts in June 2009.

Iraq wants minimal overlap between the short-term and long-term deals.

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