Iraq approves $100bn oil deals

Iraq has approved all pending deals with foreign energy firms over oil fields auctioned last year, paving the way for more than $100 billion in investment, the oil ministry said yesterday.

The nine contracts, which will be officially signed soon, will dramatically ramp up Iraq's oil output in the coming seven years and could make it one of the world's biggest crude producers, providing much-needed revenue for a country in dire need of rebuilding.

"All of the contracts have been agreed by the cabinet," oil ministry spokesman Assem Jihad said. "More than $100 billion will be invested by these companies."

Jihad said the government had introduced "minor legal amendments" to the contracts. He said the oil ministry had received official documents from Anglo-Dutch giant Shell, Malaysia's Petronas, Japex of Japan and Angola's Sonangol giving their assent to the changes.

Once the ministry receives similar documents from firms working on three other fields, "we will set a date to hold a ceremony for all the companies to put down their final signatures".

Jihad said the latter group of companies, which include Russia's Lukoil and Gazprom and China's CNPC, had already voiced their approval over the telephone.

"The companies want to start work as quickly as possible. They are very enthusiastic."

Iraq awarded seven contracts in a December 11-12 auction of oil fields, including the rights to extract crude from the massive Majnoon and West Qurna-2 reservoirs.

Those were in addition to three contracts handed out at an earlier auction in June. Two of those contracts have yet to be officially signed, however.

The successful companies will be paid a fixed fee per additional barrel of oil extracted, and not a share of the profits.

The deals could increase Iraq's projected oil output to 12 million barrels of oil per day from current production of around 2.5 million bpd, providing a cash influx to a country that relies on oil sales for 85 per cent of government income.

But security and dilapidated infrastructure remain key obstacles to Baghdad achieving that target.

Iraq has the world's third-largest oil reserves, behind only Saudi Arabia and Iran, with an estimated 115 billion barrels.