Iraq readying 'special' oil deals

BAGHDAD, Feb. 4 (UPI) -- Iraq will pay with oil instead of cash to oil majors that sign special technical service agreements aimed at short-term increases in oil production.

ExxonMobil, Chevron, ConocoPhillips and Shell are firms targeted for the deals, The Times of London reports. In exchange for the oil, the companies would direct training of Iraqi workers and equipment to Iraq's largest oil and gas fields.

Iraq is moving closer to signing the first major post-2003 deals in its oil and gas sector, outside of the controversial Iraqi Kurdistan deals. Iraq produces about 2.3 million barrels per day now and wants to increase that to between 2.6 million and 2.8 million bpd by the end of this year.

Although the government has the billions of dollars necessary to invest in its sector, Iraqi ministries across the board have been unable to actually spend their capital budgets. Iraq's oil sector is in need of modernization as the years of war and sanctions and the killing or fleeing of Iraqi professionals have taken a toll.

Iraq's Parliament is stuck on an oil law that would govern such developments, including the controversial move of allowing foreign firms into the nationalized sector of the world's third-largest reserves.

Argus Media reported last week the Oil Ministry was negotiating special short-term contracts with large oil companies to provide the needed training and equipment, which would give the firms special status in upcoming bidding rounds for longer-term deals on a wide variety of fields.

Big Oil and Iraqi officials have been meeting in Amman, Jordan, according to media reports.