Iraq and Libya strike it rich

Iraq and Syria strike big

European oil giant Shell and Malaysia's state-run Petronas oil company finalised a contract on Sunday to develop Iraq's giant Majnoon oil field, while Russian energy giant Lukoil signed an agreement in Baghdad on the same day to develop Iraq's massive West Qurna-2 oil field.

Elsewhere Libya struck a massive deal to buy Russian arms worth almost US$2 billion, Russian news agencies quoted Prime Minister Vladimir Putin as saying on the weekend.

"Yesterday (Friday), a contract worth 1.3 billion euros (1.8 billion dollars) was signed. It does not only involve firearms", Russian Prime Minister Vladimir Putin was quoted as saying by Ria Novosti and Interfax.

Russian diplomatic source told Interfax Tuesday however that Libya wanted to acquire 20 fighter planes, at least two S-300 air defence systems, several dozen T-90C tanks and other arms.

Moscow and the North African state enjoyed close ties during the Cold War, and much of Libya's arsenal was purchased from the Soviet Union in its last years.

Shells's triumph in the oil field comes after beat a rival bid from France's Total and China's CNPC to develop the 12.6 billion barrel field in southern Iraq alongside Petronas in December. The field currently produces just 46,000 barrels per day (bpd). Shell and Petronas have pledged to increase that output to 1.8 million bpd.

Positive upturn for investment

Royal Dutch Shell owns 60 percent of the venture, with Petronas owning the remainder according to a report from by BBC. Their joint-venture, which includes a 20-year service contract, will see the firms receive a fee of US$1.39 a barrel of oil.

Along with Norway's StatoilHydro, Lukoil also signed an initial deal in December last year to develop the field, which is expected to dramatically increase the country's crude production to 12 million bpd within seven years.

The deals between Libya, Iraq and foreign investors are indicative of a positive upturn for investment in the MENA region. It is particularly encouraging for Iraq, desperate for foreign cash after having its economic and social infrastructure ripped to pieces by years of conflict. It now needs the expertise of foreign companies to reach that goal of reviving its oil industry.

Iraq's known reserves of conventional oil rank behind only Saudi Arabia and Iran, if only its social and political stability could be guaranteed so it could take full advantage of its plentiful resources.

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