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Oil Development Plans Meet With Resistance In Iraq

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Oil Development Plans Meet With Resistance In Iraq


Oil Development Plans Meet With Resistance In Iraq

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


And I'm Robert Siegel.

It's open season in Iraq's oil fields. Today, Iraq's oil ministry announced that it's opening six prime oil-producing regions to long-term development by foreign companies. The ministry also made a surprising announcement regarding controversial negotiations with five major oil companies for short-term deals. The two plans could bring international oil firms back into Iraq for the first time since the industry was nationalized in the 1970s.

NPR's Corey Flintoff reports from Baghdad.

COREY FLINTOFF: Iraq's oil minister, Hussain al-Shahristani, said 41 oil companies have already been pre-qualified to bid for long-term development contracts in existing oil fields.

Shahristani's spokesman, Asim Jahad, said the ministry is seeking to attract experienced companies which have been reluctant to take the risk of operating because of Iraq's years of violence and instability.

Mr. ASIM JAHAD (Spokesman, Iraqi Oil Ministry): (Through translator) So this is the first step to encourage the companies to enter the Iraqi oil sector for work that's going to benefit the Iraqi oil industry in the long run.

FLINTOFF: The Oil Ministry said the deadline for bidding on work in the six oil fields is not until March of next year, with preliminary contracts to be signed next June. And there's already controversy swirling around other contract negotiations announced last week, in which the Oil Ministry said it was negotiating short-term deals with five major foreign oil companies - Exxon Mobil, BP, Shell, Total and Chevron.

The ministry insists that the companies would be hired only to provide technical assistance. But opponents see it as an encroachment on Iraq's national oil industry.

Maysoon al-Damluji is a member of parliament from the secular Iraqi National Accord. She says Iraq's efforts to oust foreign oil companies are an important part of national lore.

Ms. MAYSOON AL-DAMLUJI (Member of Parliament, Iraq): In 1972, oil was nationalized in Iraq and people feel very proud of these two movements to secure national wealth and national resources.

FLINTOFF: Oil Minister Shahristani had been expected to announce today that the agreements with the five oil giants would be signed, but he surprised observers by saying that nothing had been finalized because the companies refuse to offer consulting deals based on fees and instead wanted a share of the oil.

That contradicts earlier statements from the ministry, which had said the companies were being rewarded for providing free training and consulting to the national oil company for the past two years.

Again, Oil Ministry spokesman Asim Jihad speaking yesterday.

Mr. JIHAD: (Through translator) These companies have the experience to increase production from existing oil fields. Their role will be advising us on technology. Iraqis will carry out those plans and the companies will be paid by the Iraqi Oil Ministry.

FLINTOFF: The spokesman said the goal would be to squeeze an extra 500,000 barrels of oil a day from five existing fields. Iraqis, frustrated with gasoline shortages and rising prices, like to point out that under Saddam Hussein, there was no need for foreign help.

But Wayne Kelley, an oil analyst for RSK Energy consultants in Houston, says Saddam created a pernicious myth.

Mr. WAYNE KELLEY (Oil Analyst, RSK Energy): The myth is that the whole of Iraq is basically floating on a sea of oil, and that it's very easy to get to all of it, and that it's extremely cheap to produce all of it, and therefore, any -the Iraqis don't need any assistance in developing any of it.

FLINTOFF: Kelley says many of Iraq's oil fields pose challenges that will need technical expertise to overcome. Kelley says it will take leadership on the part of the Iraqi government to convince people that sooner or later, they will need to make some kind of deal for help from experienced foreign oil companies.

Corey Flintoff, NPR News, Baghdad.

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