MISSY RYAN
BAGHDAD — Reuters Published on Sunday, Aug. 17, 2008 1:50PM EDT Last updated on Tuesday, Mar. 31, 2009 8:31PM EDT
The Iraqi government is likely to abandon plans to sign short-term contracts with foreign oil companies, negotiations over which have stalled, a senior U.S. diplomat in Baghdad said on Sunday.
“It appears that on present form (the Iraqi government) probably won't proceed with most of these or all of them,” Charles Ries, co-ordinator for Iraq's economic transition at the U.S. embassy in Baghdad, told reporters.
“But I think that some of the companies are open to continued discussions even on relationship grounds, and some of the companies ... don't think it's worth their time.”
Iraq has been negotiating six no-bid, short-term technical support contracts with international oil firms, worth about $500-million each.
The deals would give global oil companies the first major foreign involvement in the OPEC member state's oil sector in nearly four decades.
The deals should have been signed earlier this year, but have been held up, in part due to disagreement over terms.
The six short-term deals involve Royal Dutch Shell, Shell in partnership with BHP Billiton, BP, Exxon Mobil, Chevron in partnership with Total, and a consortium of Anadarko, Vitol and Dome.
Mr. Ries said Anadarko and some of its partners had already walked away from talks with the Iraqi authorities over their deal.
He said the foreign firms were at best lukewarm to the idea of the short-term contracts which “were never going to be hugely lucrative,” but some had been pursuing them in the hope of building a long-term relationship with Iraq's oil ministry.
The short-term contracts were to be followed by longer-term development contracts that dozens of foreign energy firms are expected to bid for and which would be far more valuable.
Iraq has said it would not give preference in the long-term deals to companies that pursued the short-term contracts.
Iraq has the world's third largest proven reserves at 115 billion barrels. Decades of sanctions and war have hurt its production, and it says it can quickly boost its output with investment.
It now exports about 2 million barrels of oil per day, roughly the same amount as before the fall of Saddam Hussein.
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