Thursday, August 09, 2007
(Times online) - Two of the world’s biggest oil companies have signed an agreement to work together on projects in Iraq in the first clear sign that Western energy companies are preparing to enter the country. Reports yesterday revealed that Total had teamed up with Chevron and that they were putting together plans for Majnoon, the fourth-biggest oilfield in Iraq, with estimated potential reserves of 12 billion barrels.
Elf, now part of Total, negotiated a contract to run Majnoon with Saddam Hussein in the late 1990s. Both Total and Chevron refused to comment, but industry sources said that the two companies had met Iraqi officials to discuss a services agreement to develop the field. While less lucrative than a pro-duction-sharing agreement, where companies discover and sell on the oil, experts said that it would give them a vital foothold for other deals.
Iraq holds an estimated 110 billion barrels of oil, with more than half still to be developed, offering huge opportunities to Western companies desperate for new reserves. So far, companies such as Total, BP, Shell and Exxon have limited themselves to helping the Iraqi Oil Ministry to train junior staff and pull together data recorded under Saddam.
BP, however, is understood to have been asked to look into the potential of Kirkuk in the north. Shell is thought to have studied Rumaila, the country’s biggest oilfield. Muhammad-Ali Zainy, a former oil official in the Iraqi Government, said: “Iraq is the last remaining frontier that offers so much potential. International oil companies will be in Iraq, but in what form it is difficult to tell.”
Iraq is expected to ratify a petroleum law that would allow deals with Western companies to take place next month. However, experts believe that it could take years for companies to feel confident in sending contractors to the unstable country. The Irish-owned Petrel Resources is one of four minnows operating in Iraq under a contract to develop the Subba and Luhais field. Dave Horgan, managing director, said: “The big companies will be chomping at the bit to sign a deal. They will then hope they can delay any work for two or three years until the security scares die down.”