EUROPEAN, RUSSIAN and Chinese energy companies rather than US multinationals won contracts to develop major Iraqi oil fields in a second auction that concluded on Saturday.
“It’s a big achievement for Iraq to win such contracts at current prices,” said oil minister Hussein al-Shahristani. He said revenues could rise to $200 billion a year, three times Iraq’s annual budget, and said output could increase in a few years from the current 2.5 million barrels a day to 12 million.
“The results of the bid round should lay to rest the old canard that the US intervened in Iraq to secure Iraqi oil for American companies,” said Philip Frayne, a US embassy spokesman in Baghdad.
After the 2003 occupation, US firms sent experts to advise Iraq’s oil ministry but when bidding began they failed to win the majority of contracts because of “intense competition”, observed Thamir Ghadhban, prime ministerial adviser and former oil minister.
“The results of the auction,” he said, “confirm [that] Iraq can manage its oil policy . . . without politicisation.”
Bidding took place on only seven of the 15 fields on offer, four in the relatively stable south, two in the north and one in the centre.
The winning consortiums were led by Royal Dutch Shell and the Chinese State Oil Company.
A joint bid by Russia’s Lukoil and Norway’s Statoil secured a super-giant field near Basra. Malaysian and Angolan firms are participants in five contracts.
US-based Occidental has a quarter share in a successful consortium.
Fields in the east Baghdad area, under the restive Shia Sadr City district, and in the northeast Arab-Kurd contested Dyala Province attracted no bids.
The auction offered firms the opportunity to win about one- third of the country’s reserves of 115 billion barrels. While granting firms considerable control over field operations, the government insisted on a fixed fee for every barrel produced rather than profit-sharing, which is much more lucrative for companies.
However, Iraqis, who consider profit-sharing deals exploitative, do not want to put their country’s resources in the hands of foreign oil companies.
Since Iraq’s oil resources were nationalised between 1961-1972, foreign intervention has been a very sensitive issue.
