The possible revival of a Saddam-era oilfield deal between Iraq and China has given hope to top oil multinationals over the potential of getting contracts giving them access to Iraq's vast untapped resources.
The deal, like others made by Saddam Hussein was effectively frozen by international sanctions and then by his overthrow.
The news that Iraq's oil ministry is thinking of awarding China the first foreign contract to develop oil resources has given heart to western oil majors that Baghdad is opening up and looks ready to honor its contract rather than handing over the al-Ahdab field to the US, which has 142,000 troops in the country.
After the US led invasion in 2003, US firms won most of the big infrastructure deals and European firms feared that the same would happen with Iraq's oil wealth.
This deal, worth some $700 million, could be a beginning for other Chinese companies and a door opener for other development deals. Iraqi oil minister al-Shahristani is expected to visit China, Japan and Australia to discuss oil investment projects.
The oil minister favors centralized control of Iraq's oil, but a new constitution gives autonomous federal regions a role in
developing resources. There might be a political message in his overture to China signaling his centralization goal to the Kurdish regional government in the north which has struck deals with many independent oil exploration companies.
The government has given priority to the Ahdab oilfield because of its proximity to new power stations and refineries. It expects output to increase from 30,000 barrels per day to full capacity of 90,000 over two years.
Though Russia's Lukoil did not comment, analysts say that if Baghdad were to validate the West Qurna oilfield deal, Lukoil would be willing to start work again.
While multinationals will not sign multibillion dollar contracts until an investment law is in place and security improves, a western executive says that the Chinese "don't give a damn whether there's an investment law to protect them" and "don't have the same incentives on profitability as the international oil companies."
The major oil companies are confident that the fields they would like to work on will not be assigned to rival companies from India or China, as the Iraqi government is aware that it needs the technology and finance that international oil companies bring.
Picture Courtesy: www.flickr.com
I think after all these wasted years of destruction in Iraq. Now is the time for the Iraquis to put their heads together and give them some benefit. And regain that lost money by allowing another one of the World Powers I.E. China to invest and help them clean up this mess. And stop flickering w/ all this would-be nonsense. You Know what I'm saying? At least some people care about whats happenning in this world. And thanks for allowing me to make my comment.
Yours Truly
Rodney W. Melton
P.S.
God Bless You
Mar.5th 2007