Western firms enter Iraqi oil market.
The energy firms BP, Chevron, ExxonMobil, Shell and Total are close to concluding talks on two-year service contracts to develop natural resources in Iraq.
The contracts, expected to be signed June 30, are the first such commercial contracts since 2003.
The New York Times reported Baghdad offered the contracts to firms that offered previous pro bono consultation to Iraqi oil officials. The deals are expected to bring at least 500,000 barrels of day to the market, with profits going toward reconstruction of Iraq's sagging energy infrastructure.
David Fyfe with the Paris-based International Energy Agency said repairs to the energy infrastructure in Iraq could bring about 4 million barrels per day to markets within the next few years.
United Nations concerned over Iraqi oil revenues.
The U.N. body charged with overseeing $100 billion worth of Iraqi oil revenues said that despite some progress toward transparency, financial controls are lacking.
U.N. Security Council Resolution 1483 mandated Iraqi petroleum revenues from 2003 to 2007 be placed into the Development Fund for Iraq.
U.N. auditor for the International Advisory and Monitoring Board for Iraq Warren Sach said the results from a 2007 analysis of the DFI showed "efforts are being made … in the (Iraqi) spending ministries" but "the Iraqi administration of DFI resources remains deficient and financial management reforms need to be pursued further."
Sach said the Iraqi Ministry of Finance failed to keep adequate records of its transactions due to the use of bartered transactions and an ineffective oil metering system, the United Nations reported.
"The IAMB continues to view this matter as urgent, especially in light of the auditor's report that showed unreconciled differences related to production, export sales and internal consumption," he said.
Baghdad disputes over Kurdish oil fields delay production.
Disputes between Baghdad and the Kurdistan Regional Government are keeping as much as 70,000 barrels of oil per day from the market.
The Peshmerga Kurdish military force drove Baghdad's Iraq Drilling Co. from the northern Khurmala Dome oil field, claiming it fell within Kurdish jurisdiction.
"Some people came and stopped our production," said Iraqi Oil Minister Hussain al-Shahristani. "The federal government gave an ultimatum: Within 24 hours, if that obstacle is not removed, we'll take drastic action, and within 24 hours it was removed and production was resumed."
The field is currently producing around 30,000 barrels per day. Developments to bring the field to a 100,000 barrel-per-day capacity are stalled. Baghdad accuses the Kurdistan Regional Government of signing unauthorized oil agreements, and the dispute has left $136 million worth of development equipment in Khurmala Dome idle.
Baghdad and the KRG resumed negotiations this week over the draft federal law, revenue issues and the disputed KRG contracts, though details of progress were unavailable at press time.
Iraqi oil law disputes blocking production.
Legal delays in Iraqi oil laws are holding up full exploitation of some of the largest proven reserves in the world, officials said.
With crude oil approaching $150 per barrel, Iraqi reserves, some of the largest in the world, are becoming more and more attractive to international oil companies, the BBC said.
"Iraq is the one country that has so much proven and potential reserves -- that puts it on a par with Saudi Arabia," says Tariq Shafiq, formerly with the Iraq Petroleum Co., the monopoly controlling Iraqi reserves before 1961.
Iraq has at least 115 billion barrels of crude reserves. Energy analysts, however, said potential reserves could be more than twice that amount. As a result, the Iraqi government has allowed 35 companies to submit bids for oil contracts in the country.
Iraqi oil laws, however, have been held up in the Iraqi Parliament for the past two years over concerns over revenue sharing, jurisdiction and fears of foreign control over domestic natural resources.
Hussain al-Shahristani, Iraq's oil minister, says the concerns are unfounded, however.
"Iraq will always have control of its national wealth, and oil is the most important Iraqi national wealth," he said.
Iraq, Iran spar over shared oil fields.
Shared oil fields between Iraq and Iraq may be the source of ownership and financial disputes, the Iraqi oil minister said.
The minister said Iraq is expected to discover new joint oil fields with Syria and Turkey. Hussain al-Shahristani, the Iraqi oil minister, said that if such expectations come to fruition, international law says a third party mediator may be needed to invest in the fields and assign appropriate shares.
Iraq and Kuwait have joint fields located predominately inside the Iraqi border that are productive, but fields shared with Iran in the al-Fakka region inside Iraq's southeastern Maysan province have experienced production delays because Iran is blocking Iraqi interests from the field, al-Sumaria reported.
Shahristani said Iraq reached out to Iranian officials to reach a compromise over the field. Baghdad formed a special committee to examine the issue, but Iran so far has stalled on the deal.
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