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| Iraq |
| Oil Firms Engaged in High Stakes Game of Chicken |
| 2003-10-21 |
| EFL Newsday Even as bullets fly in Baghdad, the price of holding back from at least analyzing data from Iraq’s oil fields is to miss out on what one consultant calls the future "center of gravity" of the world’s petroleum industry. "Iraq is it. Iraq is THE oil province," the consultant, Mohamed Wafta, said Tuesday at a meeting for potential investors in Iraq’s oil industry. Wafta, a Dubai-based data manager for oil field services firm Schlumberger, was one of more than 100 participants at the conference, held in a Geneva hotel. I think this whole free marketplace thing is really going to hurt the Iraqi people. Some oil companies, particularly large, Western multinationals, are reluctant to send employees to Iraq to take a closer look at opportunities there until the U.S.-backed coalition can stop or sharply curtail attacks by Iraqi militants. Royal Dutch/Shell Group of Cos., ConocoPhillips and Mitsubishi Corp. are among those waiting to see security improve before they take the plunge. Watch the risk adverse companies become more courageous once the first competitor makes a move. "The first thing we need them to do is secure the safety so we can easily go in," said Tetsuro Imai, general manager for energy at Mitsubishi’s European headquarters in London. Safety concerns have led Iraq’s Oil Ministry to delay by at least one month a meeting for oil executives planned for December in Baghdad. Some oil specialists doubt the meeting will happen at all, and suggest that Iraqi oil officials would be better off continuing to woo investors at overseas gatherings such as this one. The stakes are high, both for Iraq and the oil companies. Iraq’s official estimate of its proven crude reserves is 112 billion barrels, second only to those of Saudi Arabia. Schlumberger’s Wafta claims this figure is long out of date and argues Iraq’s true reserves are a staggering 300 billion barrels -- the largest anywhere. "I think five years down the road, Iraq will be the center of gravity for the oil industry," he said. Iraq is unusual for its large number of identified but untapped oil fields, and many analysts believe the operational risk of drilling for crude there is low. Although Wafta acknowledged Iraq’s political uncertainty and security problems, he said they were temporary and advised would-be oil producers to get started now with the time-consuming study of seismic data and other information from any of Iraq’s 80 oil fields. Sweden’s Linden Petroleum AB has recent experience in Iraq, and like some other smaller, independent oil firms, it’s chasing fresh opportunities there. Iraq is "too big to ignore," said Ian Lundin, the firm’s chairman. Lundin Petroleum had a contract in 1997 to explore for oil in Iraq’s Western Desert, but it couldn’t begin work because of U.N. economic sanctions in effect then. The new Iraqi government is likely to change the terms of this contract, so Lundin is resigned to seeking other projects in Iraq. Lundin Petroleum also does business in Sudan, where the government has fought for years against southern insurgents. Iraq’s lack of security, Lundin said, is not an issue. "You don’t just pack your bags and leave because there are a few bullets flying in different directions," he said. We feel safer around the rebel militants because they keep away the eco-freeks. Those clowns are crazy. Lundin’s big concern about Iraq is that its Oil Ministry has yet to decide what kind of commercial contracts to offer international oil companies that want to explore there. The ministry hopes to make its first formal contracts available next spring. "All the companies that have an interest in Iraq are watching very closely to see what type of contract will be offered," he said. We want all of our competitors to know that we have no intension of closing a deal. Mitsubishi’s Imai said he’d have trouble signing any contract with an Oil Ministry that wasn’t part of an elected government. The current administration has been appointed by the Americans, and he worries that any contract signed with it wouldn’t be legally binding. But if our competitors make a move, we are in like Flynn. "There is no political legitimacy in the country," he said. When we sign a deal with a governement, we like the |
| Posted by:Super Hose |
| #1 Isn't Schlumberger a FRENCH Company?! OK Rantbourgeois get your knickers in a twist since they might take biz away from Haliburton |
| Posted by: NotMikeMoore 2003-10-21 11:50:25 PM |