By Ahmed Rasheed
BAGHDAD (Reuters) - Iraq threw open the world's thirdlargest oil reserves to foreign firms on Monday, puttingBritish and U.S. companies in poll position five years afterU.S.-led troops invaded the country to oust Saddam Hussein.
The move marks the return of the oil majors, whose cash andtechnical knowhow Iraq needs to restore its oil infrastructurethat has been hard hit by sanctions and war.
But any awards to U.S. and British companies are likely toanger opponents of the invasion, who have said the 2003 war wasdesigned to control Iraqi oil reserves and serve Western oilcompanies. U.S. and British officials have denied the charges.
By allowing international firms to invest and explore itsoil fields, the Iraqi government is breaking with the policy ofmajor oil-producing neighbours like Saudi Arabia, Kuwait andthe United Arab Emirates whose national firms keep tightcontrol of foreign investment in their oil sectors.
"The six oilfields that have been announced today are thebackbone of Iraq's oil production, and some of them are gettingold and production is declining," Oil Minister Hussainal-Shahristani said.
The fields to be developed are Rumaila, Kirkuk, Zubair,West Qurna Phase 1, Bai Hassan and the Maysan fields. Maysancomprises three fields, Bazargan, Abu Gharab and Fakka.
The Oil Ministry said they are open to foreign firms forlong-term development contracts.
It said last week it hopes to sign six short-term oilservice contracts during the next month.
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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.
Shahristani announced the list of fields open for long-termcontracts at a news conference in Baghdad. The government hasalready pre-qualified 41 foreign firms to bid for thecontracts.
Two gas fields, Akkas and Mansuriyah, were also opened.
"We feel it is very important for Iraq to arrest anydecline and increase production," he said, adding he hoped tosign the deals in June 2009.
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 (251million pounds), are aimed at quickly lifting output at Iraq'slargest producing fields by a combined 500,000 barrels a day.Iraq's current oil production 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.
In terms of the short-terms contracts, Shell negotiated forthe northern Kirkuk oilfield and was also in talks on theMaysan fields, Iraqi officials have said. BP has its eyes onthe southern Rumaila field, while Exxon wants the contract forthe Zubair oilfield in southern Basra province.
And Chevron and Total were looking to work together todevelop West Qurna, also in Basra.
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.
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 SamiaNakhoul)
