Oil Giants Move to Cash-In on New Iraq Oil Law

Posted April 3, 2007 in [Energy]

As the Iraqi parliament begins to discuss the new oil law proposed by Washington, major U.S. and U.K. oil companies are busy lining up contracts [see series of articles].

ConocoPhillips looking at opportunities in Iraq, in partnership with Lukoil or on its own

By STAN CHOE, AP Business Writer

NEW YORK

ConocoPhillips said Wednesday it is talking with Iraq's oil ministry about possible projects, while continuing to work on plans to develop an Iraqi oil field in partnership with Russia's OAO Lukoil.

Chairman and Chief Executive James Mulva said the Houston-based company is continuing to look at development plans for Iraq's West Qurna field with Lukoil, in which ConocoPhillips holds close to a 20 percent stake. Lukoil's West Qurna deal initially dates to the Saddam Hussein era, and Mulva said he hopes it is affirmed.

"We've also done a lot of study and training, working directly with employees and members of the ministry within Iraq to see what ConocoPhillips can do ourselves," he said in an interview after making a morning presentation to analysts in New York.

The company would require that several issues be resolved before it operates in the country, Mulva said.

At the top of the list is a new petroleum law defining what role international oil companies would have in developing Iraq's resources.

The Iraqi Cabinet last month approved a draft oil law that seeks a fair distribution of revenue among all Iraq's sectarian and ethnic groups and seeks to encourage international investment.

Many Iraqis fear the measure will effectively hand the country's major natural resources over to foreign oil companies. Supporters say the oil giants have the billions of dollars needed to upgrade the country's aging wells, pipelines and port.

"We are waiting for the new petroleum law to be passed," Mulva said. "There's good progress in that regard, and hopefully it will be completed in time,"

When asked what he meant by "in time," Mulva said weeks to several months.

Passage of the law, Mulva said, will give the No. 3 U.S. oil company a clearer picture of what opportunities it can pursue within Iraq.

Another requirement for ConocoPhillips, Mulva said, is improved security in Iraq.

"For security reasons, we haven't had our employees in Iraq," Mulva said. The company would need positive assessments from the government and security firms for that to change, he said.

ConocoPhillips shares rose $1.32, or 2 percent, to close at $67.91 on the New York Stock Exchange. Shares have ranged between $54.90 and $74.89 over the past year.

Shell plans gas pipeline venture in Iraq

Carl Mortished, International Business Editor

The Times

* Oil giant teams up with Turkish groups

* Dependence on Russia could be cut

Royal Dutch Shell and a group of Turkish companies have joined forces to bid for a licence to produce natural gas in Iraq and pipe it to the Turkish Mediterranean oil port of Ceyhan.

Talks have taken place with the Iraqi oil ministry regarding a plan to build a gas pipeline that would link Iraq to Turkey and join with Turkish projects to export Central Asian gas into Europe.

The pipeline was discussed at a meeting last Friday in Istanbul between Iraqi, Turkish and US officials, according to Hilmi Guler, the Turkish Energy Minister.

Shell's partners are believed to include TPAO, the Turkish state oil company; Botas, Turkey's pipeline operator, and Tekfen, a construction group.

Iraq has huge unexploited gas reserves, estimated to total more than 3 trillion cubic metres, greater than those remaining in the North Sea. At present gas is flared from Iraqi oil wells, a wasteful practice that pumps greenhouse gases into the atmosphere.

A gas link-up between Iraq and Turkey could bring new supplies into Europe, reducing dependence on Russia. The talks in Istanbul were supported by the US State Department. It played a big role in promoting the controversial Baku-Tbilisi-Ceyhan pipeline, which is now delivering Caspian Sea oil into the Mediterranean. A gas pipeline is being built to deliver Caspian gas via the same route into Turkey.

Matt Bryza, US deputy assistant Secretary of State for European and Eurasian affairs, said that the Istanbul meeting was intended to prepare for higher level discussions in the future. "The aim was to introduce the Turkish side to the Iraqis and to reassure them that there was nothing to be wary of in talking to Turkey," he said.

Shell's move in Iraq follows the Iraqi Government's recent approval of a draft oil and gas law, which settles the quarrel between the Kurdistan regional government and Baghdad over who can issue exploration licences.

A Shell spokesman said: "We want to play an active role to help Iraq develop its oil and gas infrastructure."

Security concerns have prevented multinationals from entering Iraq but several independents, including DNO, the Norwegian company, are drilling wells in Kurdistan, near the Turkish border.

Iraq Not Talking with Majors Yet-Oil Minister

15/03/2007

VIENNA, (Reuters) - Iraq is not conducting negotiations yet with major oil companies on new oilfield developments, although they wait keenly in the wings, Iraqi Oil Minister Hussain al-Shahristani said on Thursday.

He said that Baghdad was waiting first for its new oil sector law to pass through parliament.

"We are not negotiating with any major oil companies for the time being, we are waiting for the hydrocarbons law to be enacted by the parliament," Shahristani said.

He repeated that the law was likely to be passed before the end of May. Iraq plans to tender for major oil projects in the second half of the year, he added.

"Meanwhile almost all the major oil companies have indicated interest to come and work in Iraq, we have MOUs with almost all of them," the minister added.

"They are preparing themselves but there is no negotiation about the development of any particular field," he said.

Memorandums of Understanding have been in place for several years with majors, who have expressed their interest in specific fields.

The new law will create the Iraq National Oil Company (INOC) which will be responsible for prized oilfields that are already discovered and producing.

These oilfields, such as West Qurna, Majnoon and Bin Umar are coveted by the majors.

Under Saddam Hussein a Russian consortium headed by LUKOIL had signed a deal to develop West Qurna, although that was cancelled by Iraq in 2002.

Iraq is also reviewing a deal to develop the Al-Ahdab field that had been signed with the China National Petroleum Corp and China's state arms manufacturer Norinco.

France's Total has initialled deals for Majnoon and Bin Umar.

Shahristani said production sharing contracts, favoured by majors, had not been proposed yet as an investment model.

"We are not discussing that form of contract yet," he said.

Production sharing deals are not favoured by producing countries keen to maintain as much control as possible over their energy assets.

"The law has left this (the investment model) open for INOC to decide what is the best for the interests of Iraq for the development of any field," he said, speaking before the start of an OPEC meeting.

Shell Intensifies Iraq Oil Lobbying With Secret Oman Meeting

By Hassan Hafidh and Benoit Faucon

Of DOW JONES NEWSWIRES

Royal Dutch Shell PLC (RDSB.LN) managers spent much of last week with top oil officials from Iraq to discuss investment terms, people familiar with the matter say, as the Anglo-Dutch major intensifies its lobbying in order to lead development of the country's gas industry.

The company hosted a week of meetings behind closed doors at a hotel in Muscat, Oman, to exchange information on prospective oil and gas joint-venture contracts and investments to upgrade Iraq's dilapidated oil industry, a person with knowledge of the talks told Dow Jones Newswires.

The company recently completed a gas master plan, according to other people familiar with the matter, a potential blueprint for developing the country's gas sector to meet urgent domestic demand first, followed by exports.

Veteran Iraqi oil expert Issam al-Chalabi, a one-time oil minister for the country, said the talks in Muscat concentrated on the gas plan, with Shell officials apparently showing their Iraqi counterparts around its gas projects in Oman.

The Muscat meeting follows another Shell-hosted gathering in the Netherlands recently at which Iraq oil ministry officials discussed the company's gas blueprint, al-Chalabi added.

The Iraqi delegation in Muscat was led by Thamer al-Ghadhban, a former oil minister and now senior adviser to Prime Minister Nouri al-Maliki, Deputy Oil Minister Abdul Jabbar al-Wakkaa, the head of the Oil Reservoirs Co. Nateq al-Byaiti, and a senior official from the Ministry of Planning.

It isn't known who represented Shell.

The efforts underpin attempts by foreign oil majors such as Shell to ensure Iraq offers them favorable investment conditions, just as lawmakers prepare to vote on a draft oil law that puts in place a nationwide framework to develop its hydrocarbons industry.

A Shell spokesman declined to comment on the workshop but said: "We have stated our interest in help Iraq in reconstructing its oil and gas infrastructure."

The spokesman reiterated that it had set three conditions to invest in the country: free elections, which have now taken place; the implementation of new oil and gas legislation; and improved security.

Iraq's Al-Ghadhban wouldn't comment.

Shell has long expressed interest in opportunities in Iraq, where it had concessions from the 1920s until the nationalization of its oil industry in 1972.

It has already begun studies for the government with an eye to possible acreage when the oil law is passed.

Following cabinet approval last month, lawmakers in Iraq are soon to debate the oil law that is expected to open the country's 115 billion barrels of proven oil reserves, the world's third largest, to foreign investors.

But the legislation's current form fails to clarify issues critical for investment in the country, namely the terms for foreign oil companies' participation, and whether they would be allowed to take majority stakes in some Iraqi oil fields.

International oil companies have long been accused of attempting to influence the terms of oil investments in Iraq.

In the fall of 2004, the International Tax and Investment Centre, which lobbies lobbying for business-friendly legislation and is financed by companies such as BP PLC (BP) and Shell, delivered a report advocating production sharing agreements in Iraq.

The Centre's Iraq project, which comprises BP, Shell, Eni SpA (E), Exxon Mobil Corp. (XOM), Total SA (TOT) and Chevron Corp. (CVX), is due to meet again this spring. Shell Desperate For Iraq Success

Shell is desperate to gain a foothold in Iraq because "its current oil stakes aren't in a good situation" according to Shamkhi Faraj, a former Iraqi oil official and now an oil consultant.

Iraq, he added, "wants to diversify its investment relations with oil majors to include not only American companies but also European, like Shell, and others."

Al-Chalabi added that Shell boasts particularly strong relations with Baghdad, even during the former regime of Saddam Hussein.

Iraqi oil officials have previously said Shell was holding talks for a service contract to carry out oil field development in Iraq as well as to develop Iraq's vast gas fields.

Since 2005, the Anglo-Dutch major has also been working on technical studies on the Maysan oil field in the south and the large Kirkuk field in the north.

Shell, like Norway's Statoil (STO), has an agreement to bring Iraqis to their overseas operations for training, a key part in developing relationships.

The pace of interest in Iraq from oil companies has quickened in recent months as the oil law moves nearer to completion.

ExxonMobil is joining the lengthening queue lining up to enter Iraq, though that day may be some way off.

"There are areas like Iraq that at some point in time we may be able to go," Stephen Cassiani, head of ExxonMobil's upstream research, told Dow Jones Newswires in Bahrain recently.

"We can't go now for obvious reasons...but that doesn't mean we're not watching it. It doesn't mean we don't understand it," he added.

Company Web site: http://www.shell.com

-By Hassan Hafidh and Benoit Faucon, Dow Jones Newswires; + 962 777 612 111; hafidh8@hotmail.com (Adam Smallman in London and Oliver Klaus in Dubai contributed to this article.)