Iraq throws open door to foreign oil firms

By Ahmed Rasheed

BAGHDAD (Reuters) - Iraq opened its giant oilfields to foreign firms on Monday, putting British and U.S. companies in pole position five years after U.S.-led troops invaded the country to oust Saddam Hussein.

The move to invite bids for the development of Iraq's largest producing fields should mark the return of the oil majors whose cash and expertise Iraq needs to restore its oil infrastructure that has been hard hit by sanctions and war.

But any awards to U.S. and British firms could anger opponents of the invasion, who have said the 2003 war was designed to give Western oil companies control over Iraqi oil reserves. U.S. and British officials have denied the charges.

By allowing international firms to help raise output at its key producing oil fields, the Iraqi government is breaking with the policy of major oil-producing neighbors such as Saudi Arabia, Kuwait and the United Arab Emirates where national firms keep tight control of foreign investment in their oil sectors.

"The six oilfields that have been announced today are the backbone of Iraq's oil production," Oil Minister Hussain al-Shahristani told a news conference.

"With its massive proven reserves, Iraq should not stay at its current level of production. Iraq should be the second or third largest oil-producing country."

Shahristani listed the fields as Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and Maysan -- which comprises three separate fields: Bazargan, Abu Gharab and Fakka.

The Oil Ministry said they were open for long-term development contracts. Iraq has prequalified 41 foreign firms.

Shahristani said he hoped contracts could be signed in June 2009 to raise output by a combined 1.5 million barrels per day at those fields. He added Iraq aimed to raise output to 4.5 million bpd by 2013 from the current 2.5 million bpd.

He said any firm that wanted to bid must open an office in Baghdad. Few foreign companies have any presence in Iraq because of the security situation.

Julian Lee, senior energy analyst at London's Centre for Global Energy Studies, said Iraq was a bit like Russia in the early to mid 1990s.

"No matter how risky you think it is, as an individual company you can't afford to be the only major international player that isn't interested," he said.

FRUSTRATION

Iraq said last week it also hoped to sign six short-term oil technical support contracts during the next month.

But Shahristani, showing frustration, said talks on deals that were supposed to quickly boost output at fields by utilizing the technical expertise of majors were still going on.