Iraq signs mega overseas oil deals

Iraq Oil Deals

After years of conflict following a US and UK-led invasion, Iraq has announced yesterday that it has signed a huge oil deal, worth between 14 and US$20 billion, with UK oil giant BP and China's CNPC, in addition to the recently penned agreement with a consortium led by the Italian firm, ENI.

The contract is to develop the country's southern Rumaila oilfield, one of the world's biggest. The 20-year deal is the first of several deals Iraq expects to sign in the coming weeks and months as it tries to catapult itself to third place from 11th in the league of oil-producing nations.

Since the fall of Saddam Hussein, Iraq has been desperate for foreign investment in order to stabilise its economy - vital to the nation's recovery from years of internal conflict.

2.8 million bpd

The venture is expected to boost production at the southern Rumaila field - already vital to Iraq's oil output, contributing almost half of the nation's current production of around 2.5 million bpd, and is estimated to have further reserves of 17.7 billion barrels - from the current one million barrels per day to around 2.8 million bpd.

Hussain al-Shahristani, Iraq's oil minister, said: "With these contracts Iraq has started a new phase. In the past, Iraq's oil was used to finance war, to kill Iraqis and to attack neighbouring countries.

"A fortune was wasted and Iraq's oil was a disgrace to the lives of Iraqis...This fortune will now fund reconstruction and rebuilding and improve the lives of all Iraqis."

Major foreign investments

The deal with ENI, which still needs to be approved by the cabinet, calls for the group to extract 200,000 barrels of oil a day, rising to 1.1 million a day within seven years.

But Iraq's former oil minister, Isam al-Chalabi, has criticised the recent deals, saying it had opened the country up to further exploitation by foreigners and that ordinary Iraqis would not benefit.

"It is one of the biggest mistakes that the current government is making," the former oil minister told Al Jazeera.

Taking jobs away from Iraqi people

The problem with relying so heavily in foreign investment is that a large number of jobs are set to be taken away from the Iraqi people, as both CNPC and BP are likely to bring a large proportion of their workforce with them.

The revenue will undoubtedly help rebuild the nation's infrastructure and economy, but the Iraqi people need direction. With the hope of employment and actually contributing to their country's recovery, the Iraqi people are more likely to contribute also to the nation's political stability.

Rumaila was the only one out of six oil fields and two gas fields on offer that was successfully auctioned off in Iraq's first tender of development contracts at the end of June.

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