Iraq to award oil contracts to foreign companies

Iraq on Monday will award oil contracts to dozens of foreign companies in a bid to boost production that could also give multinationals a foothold in the country's huge but underdeveloped oil fields.

The oil ministry is to hold a press conference to announce the deals which include five technical support agreements with companies such as Shell, ExxonMobil, Chevron, Total and BHP Billiton, ministry spokesman Asim Jihad said.

The ministry also plans to sign contracts with 41 other foreign companies for extracting oil, Jihad had told AFP last week. These are expected to be short-term arrangements.

The contracts do not allow investments by the foreign companies in the oil sector but do pave the way for global energy giants to return to Iraq 36 years after executed dictator Saddam Hussein chased them out.

The move is also seen as a first step to access the third largest proven crude reserves on the planet.

Jihad had said the selected companies will have the first right to develop the fields once competitive bidding comes after the nation's long-delayed hydrocarbons law is passed by parliament.

Iraq wants to ramp up output by 500,000 barrels per day from the current average production of 2.5 million bpd, about equal to the amount being pumped before the US-led invasion in March 2003.

Exports of 2.11 million bpd currently form the bulk of the war-torn nation's revenues, and the oil ministry is keen to raise capacity over the next five years to 4.5 million bpd.

Iraq's crude reserves are estimated at about 115 billion barrels, but it is sorely lacking in infrastructure and the latest technology to which it was denied access under years of international sanctions after the 1991 Gulf War.