Iraq no-bid oil deals could be in doubt -lawmakers

By Ahmed Rasheed

BAGHDAD, July 3 (Reuters) - Iraqi Oil Minister Hussain al-Shahristani has told lawmakers that short-term technical support contracts with oil majors worth around $3 billion may not get signed, two parliamentarians said.

The lawmakers, the two top officials on parliament's oil and gas committee, told Reuters late on Wednesday that Shahristani was unhappy with delays in getting the contracts agreed. One sticking point was payment terms, they said.

The six no-bid contracts are worth about $500 million each and are intended to quickly raise Iraq's oil output by a combined 500,000 barrels per day.

Iraq's proven reserves, at 115 billion barrels, are the world's largest after Saudi Arabia and Iran. But decades of war and sanctions have hobbled production.

"The oil companies are not enthusiastic about signing the contracts and there is a big possibility we will not sign them," Ali Hussain Balou, head of the committee, quoted Shahristani as telling the committee in a closed-door meeting on Wednesday.

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) are the key Western firms negotiating for the no bid contracts.

The deals are separate from long-term development contracts that dozens of foreign energy firms are expected to bid for on the country's largest producing oilfields. Shahristani unveiled those fields and outlined bidding terms on Monday.

Before he met with the oil and gas committee, Shahristani told Reuters at parliament that the short-term technical support contracts were supposed to act as bridging deals to raise production before Iraq put its giant fields out to tender.

"These technical support agreements were meant to be signed at the start of the year. We have already lost six months," Shahristani said.

Asked if Iraq was close to signing the deals, he said: "We don't know, as long as talks are continuing."

FRUSTRATION

Shahristani had already shown frustration over the delays, telling a news conference on Monday the firms were reluctant to sign because they would offer their advice from abroad and preferred to be hands on with the fields.

The short-term technical support contracts might give the majors involved a headstart in bidding for the long-term deals.

Abdul-Hadi al-Hasani, the deputy head of the oil committee and who was also in Wednesday's meeting with Shahristani, separately told Reuters that payment terms were a problem. He did not elaborate.

"Shahristani told us ... there is a possibility the technical support agreements will not be signed," he said.

Balou said Shahristani promised to send copies of any long-term contracts to the committee so they could review them. The committee must have the right to scrutinise those deals or it would try to block them, Balou said on Tuesday.

Shahristani has said he hopes the long-term deals could be signed in June 2009 to raise output by a combined 1.5 million bpd. He said Iraq aimed to raise output to 4.5 million bpd by 2013 from the current 2.5 million bpd.

The move should mark the return of the oil majors after an absence of decades.

Iraq's cabinet agreed a new draft national oil law in February last year, but it has failed to get through parliament partly because of disputes with the Kurdish Regional Government (KRG) over control of reserves and contracts. The government says it can use an existing law to move ahead on deals. (Writing by Dean Yates; Editing by James Jukwey)