.Iraq opens 6 oil fields to international bidding
BAGHDAD (AP) - The Iraqi government opened six oil fields to international bidding Monday as the nation attempts to boost daily production by 60 percent.
The potential participation of big Western companies like BP, Chevron, Exxon Mobil, Shell and Total SA (TOT) in Iraq's oil industry has been criticized in recent weeks following published reports that several were close to signing no-bid contracts with the Iraqi government.
There was an immediate outcry over perceptions that the U.S. did invade Iraq to gain access to its massive oil reserves and there was no announcement of contracts Monday by Oil Minister Hussain al-Shahristani.
He did, however, name 35 companies that would be qualified to bid on service contracts for the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan.
"These fields were chosen because their production can be raised in a short time and at a low cost," said al-Shahristani.
All of the fields are currently producing oil, and al-Shahristani said the new contracts would raise Iraq's production by 1.5 million barrels per day. Iraq currently produces 2.5 million barrels per day and hopes to raise that to 4.5 million by 2013.
The Bush administration indicated last week that it had no plans to interfere with negotiations between Iraq and Western oil giants and on Monday, the State Department said Iraq was acting alone.
"There is no U.S. government involvement in any decision in any way being taken in any form by the Iraqi oil ministry or any other ministry on these fundamental issues," said spokesman Tom Casey. "These are decisions that a sovereign Iraqi government and sovereign Iraqi officials are making on their own."
Casey likened the role of the U.S. "technical support people" to that of a lawyer whose client wants to draft a will. The client makes the decisions about who gets what and the lawyer provides advice and expertise, Casey said.
Major oil companies also distanced themselves from talk of no-bid deals that provide access to Iraqi oil.
"We have been providing services to Iraq from outside the country for a number of years," Robert Wine, a spokesman for BP. "We submitted a study of the Rumeila fields several years ago and if the discussions do lead to deal, they will focus on the technical services in that report. We need to clarify - this is not about access to the country's oil resources, or exploration. It's a management contract, to provide technical resources."
Greater oil production is key to rebuilding Iraq's devastated infrastructure and delivering energy to the country.
But the lack of security and the absence of a new legislation to manage the industry have hampered development of the oil industry.
A reduction in violence in recent months has allowed the country to boost production to its highest level since the U.S.-led invasion in 2003.
At the same time, record oil prices that surpassed $143 per barrel Monday have made Iraq's vast untapped reserves even more tempting to foreign companies. Iraq has an estimated 115 billion barrels of oil reserves and some 112 trillion cubic feet of natural gas, according to the government.
Al-Shahristani said Monday that the country would also open up the natural gas fields of Akkaz and Mansouriyah for bidding.
Every company involved in the bidding process must have an Iraqi partner and must give 25 percent of the value of the contract to Iraqi companies, said al-Shahristani.
Western participation in Iraq's oil industry, especially by American companies, has been a contentious issue ever since U.S.-led forces toppled the regime of Saddam Hussein.
Democratic Sens. Chuck Schumer of New York, John Kerry of Massachusetts and Claire McCaskill of Missouri, last week asked Secretary of State Condoleezza Rice to try to block any oil deals.
Until Baghdad agrees on how to divide the nation's oil revenues, the presence of Western companies - including U.S.-based Exxon Mobil - will heighten tensions among Iraq's feuding sectarian groups "at the same time that American service members are fighting night and day to reduce the levels of violence," they wrote.
"This is clearly a matter of national security, which we believe should trump any and all commercial interests," the senators added.
On Monday The New York Times reported that a small U.S. State Department team helped draw up contracts between the Oil Ministry and the five major oil companies. The newspaper quoted a senior State Department official as saying the team provided technical support to an understaffed Iraqi ministry.
Iraqi government spokesman Ali al-Dabbagh denied the country had ever considered a no-bid process, saying "there was never any intention to award the contracts without a tender."
Al-Dabbagh denied American influence on the Iraqi government's oil decisions, saying "politics does not come into this."
"There is no preferential treatment for anyone, no matter who," said al-Dabbagh.
MyWay
The potential participation of big Western companies like BP, Chevron, Exxon Mobil, Shell and Total SA (TOT) in Iraq's oil industry has been criticized in recent weeks following published reports that several were close to signing no-bid contracts with the Iraqi government.
There was an immediate outcry over perceptions that the U.S. did invade Iraq to gain access to its massive oil reserves and there was no announcement of contracts Monday by Oil Minister Hussain al-Shahristani.
He did, however, name 35 companies that would be qualified to bid on service contracts for the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan.
"These fields were chosen because their production can be raised in a short time and at a low cost," said al-Shahristani.
All of the fields are currently producing oil, and al-Shahristani said the new contracts would raise Iraq's production by 1.5 million barrels per day. Iraq currently produces 2.5 million barrels per day and hopes to raise that to 4.5 million by 2013.
The Bush administration indicated last week that it had no plans to interfere with negotiations between Iraq and Western oil giants and on Monday, the State Department said Iraq was acting alone.
"There is no U.S. government involvement in any decision in any way being taken in any form by the Iraqi oil ministry or any other ministry on these fundamental issues," said spokesman Tom Casey. "These are decisions that a sovereign Iraqi government and sovereign Iraqi officials are making on their own."
Casey likened the role of the U.S. "technical support people" to that of a lawyer whose client wants to draft a will. The client makes the decisions about who gets what and the lawyer provides advice and expertise, Casey said.
Major oil companies also distanced themselves from talk of no-bid deals that provide access to Iraqi oil.
"We have been providing services to Iraq from outside the country for a number of years," Robert Wine, a spokesman for BP. "We submitted a study of the Rumeila fields several years ago and if the discussions do lead to deal, they will focus on the technical services in that report. We need to clarify - this is not about access to the country's oil resources, or exploration. It's a management contract, to provide technical resources."
Greater oil production is key to rebuilding Iraq's devastated infrastructure and delivering energy to the country.
But the lack of security and the absence of a new legislation to manage the industry have hampered development of the oil industry.
A reduction in violence in recent months has allowed the country to boost production to its highest level since the U.S.-led invasion in 2003.
At the same time, record oil prices that surpassed $143 per barrel Monday have made Iraq's vast untapped reserves even more tempting to foreign companies. Iraq has an estimated 115 billion barrels of oil reserves and some 112 trillion cubic feet of natural gas, according to the government.
Al-Shahristani said Monday that the country would also open up the natural gas fields of Akkaz and Mansouriyah for bidding.
Every company involved in the bidding process must have an Iraqi partner and must give 25 percent of the value of the contract to Iraqi companies, said al-Shahristani.
Western participation in Iraq's oil industry, especially by American companies, has been a contentious issue ever since U.S.-led forces toppled the regime of Saddam Hussein.
Democratic Sens. Chuck Schumer of New York, John Kerry of Massachusetts and Claire McCaskill of Missouri, last week asked Secretary of State Condoleezza Rice to try to block any oil deals.
Until Baghdad agrees on how to divide the nation's oil revenues, the presence of Western companies - including U.S.-based Exxon Mobil - will heighten tensions among Iraq's feuding sectarian groups "at the same time that American service members are fighting night and day to reduce the levels of violence," they wrote.
"This is clearly a matter of national security, which we believe should trump any and all commercial interests," the senators added.
On Monday The New York Times reported that a small U.S. State Department team helped draw up contracts between the Oil Ministry and the five major oil companies. The newspaper quoted a senior State Department official as saying the team provided technical support to an understaffed Iraqi ministry.
Iraqi government spokesman Ali al-Dabbagh denied the country had ever considered a no-bid process, saying "there was never any intention to award the contracts without a tender."
Al-Dabbagh denied American influence on the Iraqi government's oil decisions, saying "politics does not come into this."
"There is no preferential treatment for anyone, no matter who," said al-Dabbagh.
MyWay
posted by madtom at 9:40 PM
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