Update: Heavy political fallout over the technical support agreements has caused Iraq officials to delay signing the deals with the former exclusive producers. According to the Iraqi oil minister, the contracts were not executed because the companies "refused to offer consultancy based on fees as they wanted a share of the oil." I would too, if I had the option between being paid in devalued dollars or $140/barrel crude. In order to make the agreements politically more acceptable, the ministry announced it had selected 41 other companies included six state owned firms to compete for long term production agreements. A disclosure by US officials caused more consternation over the contracts and potential conflicts of interest. A group of US advisers, lead by a small State Department department team advised the oil ministry during the negotiations, even providing template contracts and detailed drafting suggestions. The contracts were not competitively bid. When asked about the US role in the negotiations between private companies and a foreign state, a State Department official said he saw no possible conflict of interest. Wackydoodle sez: "Ain't no conflict long as I get paid".[photo: Darth & the Boys in conference]
The big oil internationals who founded the Iraq oil industry are set to return to the patch after reaching agreement with the Baghdad government to provide oil service expertise to repair and upgrade equipment and facilities, reports Patrick Cockburn for the British Independent newspaper. Shell, BP, Exxon-Mobil and Total will sign agreements at the end of the month, the first with large Western companies since the U.S. invaded in 2003. These companies were joint venturers in the British-French-American consortium that controlled Iraq's oil for forty years before it was nationalized by Saddam Hussein in 1972. The two year technical support contracts are for services only, but the companies have the option to be paid in cash or crude oil, and the service agreements position them for follow-on production agreements. Experts estimate that the foreign companies will add 500,00 bpd to Iraq's current level of 2.5 million bpd. Saddam's move to nationalize Iraq's oil production was popular. Many Iraqis believe that the invasion of their country by the United States was motivated by the desire to return control of reserves thought to be second only to Saudi Arabia to the West.