Smart oil countries look to good tech

ARTICLE: Oil Companies Look to the Future in Iraq, By TIMOTHY WILLIAMS, New York Times, November 30, 2009

So the Western oil companies, contrary to conspiracy thinking, don't get to clean up just yet. And yet, also contrary to such thinking, plenty of smart Iraqis know they need Western technology to achieve what they think is possible for the nation's oil industry in coming years.

Analysts say the deals on three of the country's top fields show that Iraq, after an embarrassing start, may be on a path to joining the world's major oil-producing nations, which could in turn upset the equilibrium in OPEC and increase tensions with the neighboring oil giants Iran and Saudi Arabia. Adding to those strains, development rights to 10 other Iraqi oil fields will be offered to foreign companies at a public auction in Baghdad on Dec. 11.

However, the auction and the contracts come at an awkward time: just months before national elections that could provoke renewed violence or sweep in a new government that could disown the deals.

In the recent deals, the major oil companies have agreed to accept service contracts, in which they earn a fee for each barrel of oil produced. Yet they vastly prefer production-sharing agreements, in which they gain an equity stake in the oil itself. Such deals are far more lucrative to oil companies, but for Iraqis they are reminiscent of the colonial era, when foreign companies controlled the country's oil wealth. "We have shown that we can attract international companies to invest in Iraq and boost production through service contracts," Hussain al-Shahristani, Iraq's oil minister, said recently. "They will not have a share of Iraqi oil, and our country will have total control over production."

But Iraq has also been forced to acknowledge that it cannot hope to revive its decrepit oil industry without the money and the technical expertise of the major companies. Despite strong anti-American sentiments among the Iraqi public, few officials want to refuse American cash.

"We do not have any preferences," said Abdul Hadi al-Hassani, deputy chairman of Parliament's Oil and Gas Committee. "We are interested only in the financial health of the company and in their technical know-how. American companies are well known in the oil sector."

A bit of right-thinking to be tracked, in contrast to that genius in Caracas.

Comments

[Hugh]

Supports an earlier post WRT, you want your businessmen smarter than your politicians.

[Petrer]

Definitely, It is the reason why I always recommend some stock money in Brazil (oil, metals, telecom, food etc.) and I avoid Venezuela like the "sulfur" from Bush junior's body.