Exxon, Shell: Iraq oil law needed for deal

HOUSTON, Feb. 13 (UPI) -- Iraq's legal framework is still uncertain, Big Oil firms say, though negotiations on oil and gas deals are ongoing and could wrap up by next month.

"Shell along with other major international oil companies are quite interested in future possibilities in the country of Iraq," Shell Gas and Power Executive Director Linda Cook said Wednesday at an international energy conference in Houston.

Iraq has the world's third-largest reserves of oil and sizeable gas reserves but is largely undeveloped and underexplored. Shell, ExxonMobil, BP and Chevron are in discussions with Iraq's Oil Ministry for special technical support contracts, a first step in Iraq's long-awaited development of its energy sector.

It doesn't have a modern oil law, however, relying on Saddam-era guidelines and, loosely, the framework of a draft but highly contentious new oil law.

"We have stated that we are interested in pursuing those when the conditions are right," Cook said, "conditions meaning safety and security of our own staff plus making sure that we're doing it in accordance with the laws that would be enacted by the country including the new oil law which has yet to be put through final legislative approval."

The technical support contracts would direct expertise, training and equipment from the firms to specific fields from which Iraq wants to boost production. These would be short term, about two years. Bidding rounds for more fields are expected later this year and next.

Shell is in talks for the Kirkuk field in Iraq's north as well as fields in southern Missan province. It's also interested in developing the Akkas gas field near the Syrian border and associated gas in the south.

The ministry has been discussing phases one of West Qurna with Chevron, North and South Rumaila with BP and Zubair with ExxonMobil, according to numerous sources who talked to United Press International. The final fields and companies will likely not be finalized until deals are announced.

"My guess is every international oil company in the world, knowing Iraq is blessed with terrific god-given natural resources, is interested in Iraq," ExxonMobil Corporate Vice President Daniel Nelson said at CERAWeek, the world's largest annual energy conference. "I'm not giving any competitive secrets away there."

"There's an element of physical security that relates, that's so obvious it doesn't really bear discussion at great length," Nelson said. "More important is you have confidence you have a system of laws and a system of fiscal stability that's going to be together for not only the 6,7,8,9 years that it takes from the time you start up working in a venture to the time you have significant production and through that 30-year period you really need to get the returns back."

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Ben Lando, UPI Energy Editor

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(e-mail: blando@upi.com)