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Iraq condemns oil majors' "humanitarian" failure
August 20, 2008 / 5:04 PM / 9 years ago

Iraq condemns oil majors' "humanitarian" failure

MOSCOW, Aug 20 (Reuters) - A top Iraqi official on Wednesday attacked oil majors for trying to overcharge the war-torn nation and ignoring their “humanitarian” duty to help develop Iraq’s battered oil industry.

“Foreign companies, including Russian companies, have not taken up the call to develop these projects. As a result of them not wanting to work in these conditions, the Iraqi people have suffered greatly,” Karim Waheed, Iraq’s electricity minister, said at a news conference in Moscow.

The attack came after Iraq delayed the signing of short-term oil service contracts with oil majors due to disagreements over payment terms and their duration.

Iraq and major international oil companies have been negotiating six short-term technical service contracts, each worth about $500 million and targeting a 100,000 barrels per day increase in output from six of Iraq’s biggest oilfields.

The companies involved in negotiations included Royal Dutch Shell (RDSa.L) and Exxon Mobil (XOM.N). The firms, jostling for years to position themselves for access to the world’s third-largest oil reserves, had hoped that the contracts would give them a headstart in negotiations for future deals.

“The invitations to take part in these projects have not only an economic but a humanitarian character,” Waheed said after meetings with Russian energy minister Sergei Shmatko and the heads of Russian energy service firms.

In negotiating deals, foreign majors had counted on Iraq’s ignorance of the markets in trying to overcharge the country in a time of need, the Iraqi minister said.

“Some companies in those cases demanded sky-high prices for their services, thinking Iraq does not have a grasp of international financial markets. They were unpleasantly surprised when they found out we fully understand global commodity markets and global stock markets,” he said.

Waheed also reiterated Iraq’s traditional stance that Russian oil major LUKOIL (LKOH.MM) would have to compete on equal terms with other contenders to develop the giant West Qurna deposit at next year’s tenders.

LUKOIL signed the $4 billion West Qurna deal with the government of Iraq’s former dictator, Saddam Hussein, over a decade ago but Baghdad scrapped the deal shortly before Hussein was deposed by a U.S. invasion in 2003.

“These contracts are old in many ways. Firstly the price of metals and other building materials has increased dramatically, not to mention the price of oil...” Waheed said.

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