By Ahmed Rasheed
BAGHDAD (Reuters) - Iraq on Monday opened its giantoilfields to foreign firms, clearing the way for majorinvestment by multinationals ushered out nearly 40 years agounder nationalisation.
The move is a breakthrough for the return of the oilmajors, whose cash and technical knowhow Iraq needs to restoreits antiquated oil infrastructure that has been hard hit byyears of sanctions and war.
The fields are Rumaila, Kirkuk, Zubair, West Qurna Phase 1,Bai Hassan and the Maysan fields. Maysan comprises threefields, Bazargan, Abu Gharab and Fakka, and the Oil Ministrysaid they are open to foreign firms for long-term developmentcontracts.
It said last week it hopes to sign six short-term oilservice contracts during the next month.
Taken together, the short-term and long-term contracts willopen the door to major international involvement in the OPECmember's oil sector for the first time in nearly four decades.
The majors have been positioning for years in the hope ofeventually gaining access to Iraq's proven reserves, which at115 billion barrels are the world's largest after Saudi Arabiaand Iran.
Deputy Prime Minister Barham Salih said in April thatreserves could be as much as 350 billion barrels.
Oil Minister Hussain al-Shahristani announced the list at anews conference in Baghdad. The government has alreadypre-qualified 41 foreign firms to bid for the contracts.
Two gas fields, Akkas and Mansuriyah, were also opened.
The Oil Ministry said last week it had finishednegotiations with oil majors on six separate short-term oilservice contracts and hoped to sign those deals during the nextmonth.
The short-term deals, each worth about $500 million, areaimed at quickly lifting output at Iraq's largest producingfields by a combined 500,000 barrels a day. Iraq's current oilproduction is around 2.5 million bpd.
Five of the short-term deals that have been underdiscussion are with Royal Dutch Shell, Shell in partnershipwith BHP Billiton, BP, Exxon Mobil and Chevron in partnershipwith Total.
Iraq has also been in talks with a consortium of Anadarko,Vitol and Dome for a sixth short-term contract.
Those talks on the short-term deals have given the majors ahead start in efforts to bid for future oil contracts.
Indeed, in terms of the short-terms contracts, Shellnegotiated for the northern Kirkuk oilfield and was also intalks on the Maysan fields, Iraqi officials have said. BP hasits eyes on the southern Rumaila field, while Exxon wants thecontract for the Zubair oilfield in southern Basra province.
And Chevron and Total were looking to work together todevelop West Qurna, also in Basra.
DEEP HISTORY, RESENTMENT
But many Iraqis still bear a grudge after British, Americanand French oil companies controlled their oil industry for halfa century through the Iraq Petroleum Co (IPC).
It was an era when Western majors working in the MiddleEast used oil output and prices as an economic and politicaltool, analysts said.
From the time it struck oil at the huge Kirkuk field in1927 until nationalism forced it out in 1972, IPC -- made up ofBP, Exxon, Mobil, Shell, CFP (Total) and Partex - ruled theroost.
That did not sit well with Baghdad, which resented IPC'scontrol over its revenues.
After bids are submitted for the long-term contracts,negotiations may take months. At the end of 2008 or in early2009, the oil ministry has said it would announce the winners.
Oil is Iraq's main source of income, and boosting output iskey to earning the cash the country needs for reconstruction.
Iraq's cabinet agreed a draft oil law in February lastyear, but it has failed to get through parliament partlybecause of rows between the Kurdistan Regional Government (KRG)and Baghdad over who will control oil reserves and contracts.
In the absence of the law, Baghdad has moved ahead with theshort and long-term contracts, saying this is in line with anold oil law in existence before the U.S.-led invasion in 2003that toppled Saddam Hussein.
(Writing by Dean Yates and Tim Cocks; Editing by JamesJukwey)
