Iraq Hopes to Call Open Race For Its Oil in Sept

Iraq hopes to call an open race as early as September for its prized oilfields, its oil minister said on Thursday.

Iraq hopes to call an open race as early as September for its prized oilfields, its oil minister said on Thursday after talks in Moscow dashed Russian hopes of getting a slice of oil reserves on preferential terms.

Hussain al-Shahristani told Reuters he hoped parliament would pass the key new oil legislation after the holidays, opening the way to call tenders for around a third of Iraqi fields, although untapped and far from producing deposits.

"We have been informed that they will come back to work in the first week of September and pass the law by the end of September," he said.

Iraq controls the world's third-biggest oil reserves and the world's top firms have been manoeuvring to win a slice of them for ages despite huge damage to infrastructure from decades of wars and sanctions.

"There will be no specific talks with any company over any particular field. What will happen is that Iraq will announce the development of certain fields and all qualified oil companies can come and compete."

He also said that all 27 producing fields in Iraq will be transferred to the national oil company, which will be free to decide whether it wants to have partners or not.

"For the discovered fields we know all the risks and we don't see any necessity to bring foreign companies as majority shareholders," he added.

Iraq also has 53 untapped deposits, of which some are adjacent to producing ones and they would thereby also be transferred to the national company. "Therefore around one third is left and can be put at open tenders," the minister said.

Oil and gas produced will belong to Iraq and the fields will remain under state control. Only companies that currently produce more crude than they hope to extract in Iraq will be allowed to bid, said Shahristani.

Given the fields' potential, Iraqi production could rise to 6 million bpd by 2012 from the 4 million bpd projected for 2010 and the current 3 million bpd.

Shahristani also said he was not concerned by the approval of a new Kurdish oil law. "The federal government will not lose control (of Kurdistan). Any contract in any part of Iraq has to be authorised by the federal council for oil and gas".

LUKOIL HOPES DASHES

The 27 fields producing include West Qurna, he said.

Russian oil major LUKOIL had hoped to revive a $4 billion Saddam-era deal to develop West Qurna, but the minister said the issue was not specifically raised at his meeting with Russian Energy Minister Viktor Khristenko.

The meeting lasted for two hours and LUKOIL's top executives attended. Russia did not support the U.S.-led invasion of Iraq, prompting analysts to speculate that its chances of reviving old deals were slim.

Some analysts have however said U.S. oil major ConocoPhillips, which holds 20 percent in LUKOIL, could help the Russian company revive the contract.

Shahristani said he could not understand why the deal should be revived, especially after it was scrapped in the late days of Saddam's government on the grounds that LUKOIL has done nothing to launch the fields since 1997.

"This deal was signed and scrapped by the previous regime. There are documents in the ministry's archive saying that the contract is terminated because its terms are not met," he said.

He also said Moscow was making no connection between Iraq's $10 billion outstanding debt to Russia and oil contracts.

"It has been clear in our discussions (in Moscow)," he said.

Russian Energy Ministry quoted Khristenko as telling Shahristani LUKOIL and other firms were prepared to change the terms of old contracts, help Iraq with key social plans and projects in third countries.

LUKOIL's shares closed 2.43 percent down, in line with other Russian oil stocks and the broader market.