Global Policy Forum

Total, ENI, Royal Dutch/Shell in Development Talks, but US Firms Might Get First Shot

Iraq has begun to court several European oil company investors as it seeks to spur development of the country's massive oil reserves before Washington hands over power, a senior Iraqi official said Monday.

As part of the process, new Iraqi Oil Minister Ibrahim Bahr al-Uloum will insist multinationals help train Iraqi engineers -- finally freed of Saddam Hussein and more than a decade of United Nations sanctions -- to international standards. "We met a number of European companies after the OPEC meeting and invited them to present their thoughts on how to develop the oil industry of Iraq," Nabeel Musawi, a member of Iraq's OPEC delegation, told Reuters by telephone from Baghdad. An Iraqi delegation attended OPEC's Sept. 24 meeting in Vienna. "Dr. Ibrahim's idea is to get some social development projects injected into the process... and one of the main areas is training Iraqis outside Iraq."

European majors will be encouraged by Iraq's informal overtures, but Musawi, a deputy on Iraq's U.S.-backed Governing Council, has said U.S. firms may be given preference in Iraq's oilfields, home to the world's second-largest reserves. Musawi declined to name the companies with whom Uloum met in recent days. But under the rule of Saddam, European majors had their sights set on some of Iraq's biggest oilfield prospects. France's Total spent years negotiating for Majnoon and Bin Umar, Italy's ENI and Spain's Repsol had shown interest in Nassiryah and Royal Dutch/Shell had its eye on Ratawi. Multibillion-dollar deals for those prized gems will only be signed after an elected government is in place, said Musawi.

The Governing Council instead is likely to focus on short and medium-term projects that will require $2 billion of investment in the early stages. The initial cash influx will boost output in Iraq's dilapidated oil sector to 3.5 to 4 million barrels daily by end 2005 from 1.8 million now.

A post-war breakdown in law and order is keeping the world's top oil companies out of Baghdad, but the Iraqi official said some potential investors are undeterred by the violence. "They have to be here to get involved," said Musawi. "Quite a number of companies are on the way or are already here to make their presentations." A senior Iraqi oil official said foreign oil companies might be invited to Baghdad for an official conference in December.

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