Iraqi cabinet OKs deals with oil giants
Iraqi Cabinet Gives Green Light to Oil Ministry to Sign Deals With Oil Giants

(Gold9472: Mission Accomplished.)

Mar 05, 2008 06:44 EST

Iraq's cabinet has given the green light to the Oil Ministry to sign agreements with international oil companies to help increase the nation's crude output, a ministry official said Wednesday.

The two-year deals, known as technical support agreements, or TSAs, are designed to develop five producing fields to add 500,000 barrels per day to the country's 2.4 million barrels per day output.

Last December, Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp. and Chevron Corp. submitted technical and financial proposals for the five fields and received counterproposals from the Iraqi side.

In January, representatives from the companies and Iraq met again in Amman, Jordan, and they will hold a third round of discussions later this month, said the official, who spoke on condition of anonymity because he was not authorized to release information.

In Vienna, Iraq's Oil Minister Hussein al-Shahristani said Iraq intends to compensate these companies with crude oil rather than in cash, the Dow Jones Newswires reported Wednesday.

Speaking to reporters as he arrived for a meeting of the Organization of Petroleum Exporting Countries, al-Shahristani said the Oil Ministry was still working on the compensation details with the Development Fund of Iraq, which is controlled by the United States and the United Nations.

Iraq's average production was 2.4 million barrels per day in January while exports stood at an average of 1.92 million barrels per day. December's exports averaged 1.81 million barrels per day.

The oil giants are among more than 70 international firms that met the ministry's deadline of Feb. 18 to compete to help develop Iraq's oil reserves, seen as vital to providing the funds to rebuild the shattered country.

Iraq is in dire need of expertise from international oil companies to achieve the Oil Ministry's target of 3 million barrels per day by the end of 2008. The country has been relying on a Saddam Hussein-era natural resources law until Parliament approves a new oil law to regulate the international oil companies' work and share Iraq's oil resources among the country's Shiites, Sunni Arabs and Kurds.