By Ahmed Rasheed
BAGHDAD (Reuters) - Iraq opened its giant oilfields toforeign firms on Monday, putting British and U.S. companies inpole position five years after U.S.-led troops invaded thecountry to oust Saddam Hussein.
The move to invite bids for the development of Iraq'slargest producing fields should mark the return of the oilmajors whose cash and expertise Iraq needs to restore its oilinfrastructure that has been hard hit by sanctions and war.
But any awards to U.S. and British firms could angeropponents of the invasion, who have said the 2003 war wasdesigned to give Western oil companies control over Iraqi oilreserves. U.S. and British officials have denied the charges.
By allowing international firms to help raise output at itskey producing oil fields, the Iraqi government is breaking withthe policy of major oil-producing neighbours such as SaudiArabia, Kuwait and the United Arab Emirates where nationalfirms keep tight control of foreign investment in their oilsectors.
"The six oilfields that have been announced today are thebackbone of Iraq's oil production," Oil Minister Hussainal-Shahristani told a news conference.
"With its massive proven reserves, Iraq should not stay atits current level of production. Iraq should be the second orthird largest oil-producing country."
Shahristani listed the fields as Rumaila, Kirkuk, Zubair,West Qurna Phase 1, Bai Hassan and Maysan -- which comprisesthree separate fields: Bazargan, Abu Gharab and Fakka.
The Oil Ministry said they were open for long-termdevelopment contracts. Iraq has prequalified 41 foreign firms.
Shahristani said he hoped contracts could be signed in June2009 to raise output by a combined 1.5 million barrels per dayat those fields. He added Iraq aimed to raise output to 4.5million bpd by 2013 from the current 2.5 million bpd.
He said any firm that wanted to bid must open an office inBaghdad. Few foreign companies have any presence in Iraqbecause of the security situation.
Julian Lee, senior energy analyst at London's Centre forGlobal Energy Studies, said Iraq was a bit like Russia in theearly to mid 1990s.
"No matter how risky you think it is, as an individualcompany you can't afford to be the only major internationalplayer that isn't interested," he said.
FRUSTRATION
Iraq said last week it also hoped to sign six short-termoil technical support contracts during the next month.
But Shahristani, showing frustration, said talks on dealsthat were supposed to quickly boost output at fields byutilising the technical expertise of majors were still goingon.
He said the firms were reluctant to sign the technicalsupport contracts because they would offer their advice fromabroad and preferred to be hands on with the fields.
"We are losing time," Shahristani added.
Taken together, the short-term and long-term contractsshould open the door to major foreign involvement in the OPECmember's oil sector for the first time in nearly four decades.
Iraq's proven reserves, at 115 billion barrels, are theworld's largest after Saudi Arabia and Iran. Deputy PrimeMinister Barham Salih said in April that as yet unprovenreserves could make the total as much as 350 billion barrels.
The short-term technical deals, each worth about $500million (251 million pounds), are aimed at lifting output atIraq's largest producing fields by a combined 500,000 barrels aday.
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 should give the majorsconcerned a head start in efforts to bid for future contracts,although Shahristani said no company would get any "privilege"in bidding for the fields announced on Monday.
RESENTMENT
U.S. State Department spokesman Tom Casey said: "The UnitedStates was not involved in any decisions to award contracts, tomake determinations of what kinds of contracts would beoffered, to provide advice over what kinds of contracts wouldbe offered."
Many Iraqis still bear a grudge after British, American andFrench oil companies controlled their oil industry for half acentury 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 go well with Baghdad, which resented IPC'scontrol.
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 new draft national oil law inFebruary last year, but it has failed to get throughparliament.
Baghdad has moved ahead with the contracts, saying this wasin line with an old law in existence before the invasion.
(Additional reporting by Chloe Fussell in London; Writingby Dean Yates; Editing by Janet Lawrence)
