World's Energy

WASHINGTON, June 26, 2009 (UPI) - Iraq plans to award 20-year service contracts to international oil companies next week for six oil fields in a sign the country is advancing, analysts say. The announcement coincides with the Tuesday deadline for U.S. combat forces to pull out of Iraqi cities and villages as the country recovers from years of political and sectarian conflict in the post-invasion era. Iraq holds an estimated 115 billion barrels of known oil reserves, or slightly more than 9 percent of the global reserves. In terms of natural gas, though the country lacks the infrastructure to develop its full potential, Iraq ranks 10th in the world. More than 30 companies, including supermajors Royal Dutch Shell, Chevron and Total, are bidding on the service contracts to rehabilitate major oil fields in Iraq. The state-owned South Oil Co. of Iraq called on the Iraqi oil minister to abandon plans for the end of June to open the country to foreign investors. Fayad al-Nema, the director of the company, said in a memo that some of the terms of the pending 20-year service contracts were identical to the work conducted currently by SOC. But despite political infighting and a tumultuous contractual relationship with Baghdad and domestic concerns over Washington's motives in Iraq, Simon Henderson, a fellow at The Washington Institute for Near East Policy, said the service contracts were positive for Iraq. "At current volumes, Iraq has more than a hundred years of both oil and gas production," he writes. "Despite the talk of the eventual emergence of a post-oil world, Iraq is looking for an increased role in the present one."