Sunday, August 1, 2010

Some of the world’s largest oil companies are bidding for a slice of Iraq’s untapped reserves

Oil firms are hoping the past will be no guide to the future when they bid today for six of Iraq’s biggest oilfields and two gas fields in the war-shattered country’s first major tender since 2003.

Thirty-two foreign firms will be competing, including Exxon Mobil, Total and Royal Dutch Shell.

The winners will get a foothold in a country with some of the world’s largest remaining untapped reserves, but they will also find that they may need to take some precau-tions to protect their investment.

Iraq is one of the most challenging places in the world for energy firms, one security consultant said.

“The commercial risk is huge and this is still an unsettled place,” the consultant added.

Pipelines shattered by bombs. Officials blown up in roadside blasts or kidnapped from their office at gunpoint. Oil terminals crippled by suicide attacks. However, Iraq’s oil wealth could be a blessing as well as a curse as its reserves of 115 billion barrels, the world’s third largest, should allow it to be able to rebuild after years of conflict.

The lure of oil riches also stirs deep rivalries and some old suspicions.

Many Iraqis believe foreign firms will plunder Iraq’s oil, said Hugh McManners, a spokesman at Erinys, a security firm hired by the US government after the 2003 invasion to rebuild the specialised force protecting Iraq’s oil infrastructure.

“Security is a huge expense but then at big oil companies we are used to that. We work in some difficult places, like Nigeria. I would estimate security will add ten to 15 per cent to the project,” said an executive from one of the bidding companies.