Iraqi oil director wants to scrap deals

BAGHDAD, June 18 (UPI) -- 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.

Nema had complained earlier the foreign deals would put the national economy in "chains" and "shackle" national independence for decades.

The memo, obtained by the Platts news service, complains the terms of the service contracts use current production rates as the benchmark rather than pre-2003 levels, creating a foreign bias.

Oil production in southern Iraqi fields is in decline because of a lack of investments reaching back to the era of Saddam Hussein. Iraqi lawmakers, meanwhile, called Iraqi Oil Minister Hussain al-Shahristani in for questioning over the need to invite foreign companies into the country following years of federal investments.

The Nema memo calls on Iraq to abandon the service contracts in favor of short-term technical service contracts, which were abandoned in 2008 because of a failure to reach necessary agreements.

Oil fields in the Kurdish regions of Iraq began oil exports June 1. Iraq is set to open the first round of bidding for eight service contracts in the oil and gas sector at the end of June.