|Editorial Highlights 07-22-08|
|Iraq asks oil majors to shorten service contracts: Reuters|
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 ; Shell in partnership with BHP Billiton ; BP ; Exxon Mobil ; and Chevron partnership with Total . A consortium of Vitol, Dome and Anadarko 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.
Oil industry eyes Iraq investment with caution: REUTERS
Industry executives say the main reason oil companies are prepared to consider entering service agreements is because they hope it will position them well to secure better deals at a later stage.
"I think eventually they will go to PSAs but at the moment it's a difficult sell within Iraq to do anything other than service agreements," said Robin Allan, Director of Business Development, at Premier Oil, one of the 41 foreign firms Iraq has prequalified to bid.
If this happens, it would be a coup for the industry -- Iraq's proven reserves, at 115 billion barrels, are the world's largest after Saudi Arabia and Iran -- but many doubt it.
Like neighbors Kuwait and Saudi Arabia, Iraq threw out the IOCs in 1970s and a deep hostility to foreign investment in oil endures in the region. Also, some Iraqis believe the U.S.-led invasion of Iraq was launched to secure oil.
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