Thursday, September 28, 2006
Iraqi oil minister to visit China, Japan, Australia
Oil, Commerce
Iraq could give China the first foreign contract to develop its oil resources if Beijing agrees to revive a deal originally signed under Saddam Hussein's government, the Iraqi Oil Ministry said Sept. 27. Oil Minister Hussain al-Shahristani has plans visit China, Japan and Australia to discuss oil development and export projects, specifically noting that he will talk with the Chinese about honoring Saddam Hussein-era contracts. Iraqi officials believe China will first agree to develop the Ahdab oil field in south-central Iraq, which has a capacity of 90,000 barrels per day, for an estimated $700 million. The field was awarded to China National Petroleum Corp and Chinese state arms manufacturer Norinco by Saddam. The deal, like others signed by Saddam, was effectively frozen by international sanctions and then Saddam's overthrow.
Russian and French companies that signed or negotiated deals under Saddam have been keen to hold onto the advantage in the face of challenges from firms from the United States and elsewhere. New Iraqi leaders, brought to power by the U.S.-British invasion, have yet to take decisions.
COMMENT: While American oil companies - who were exluded by Saddam - wait for Iraq to pass new investment laws in the oil sector, the Iraqi Oil Ministry is starting negotiations with old partners who are more willing to work in high-risk environments than the Americans. This could lead to American oil companies losing out on Iraqi oil deals to other more eager, historically more established and less fussy foreign investors. COMMENT ENDS.
