Baghdad (AsiaNews/Agencies) – China National Petroleum Corp (CNPC) and British giant BP are the first foreign companies to sign contracts with Iraq to develop its oil resources. The companies succeeded in their bid for the giant Rumaila oilfield in southern Iraq, which has known reserves of 17.7 billion barrels.
The contract was the first to be awarded in open tendering for six major oilfields and two gas fields, nearly four decades after Saddam Hussein's Baa‘th party nationalised the Iraqi energy sector.
“The companies accepted to be paid US$ 2 per barrel,” said Oil Minister Hussain al-Shahristani.
Under the terms of the 20-year contract, BP and CNPC have six years to increase production at Rumaila to 2.85 million barrels per day.
But Iraq's long-awaited licensing round to develop some of its massive oil reserves stumbled as oil and gas companies dug in their heels, demanding more money for their efforts than the government was willing to pay.
The two contracts signed yesterday represent never the less a step forward for the country which, after years of embargoes and sanctions, is opening its oil fields to foreign companies to finance its reconstructions.
With oil money Iraq will be able to pay for infrastructure projects across the country like schools, roads, airports, housing, and hospitals.
For Prime Minister Nuri al-Maliki, “These contracts are needed for the reconstruction of Iraq,” adding that “They are for the benefit of Iraqis and the companies.”
Iraq’s Oil Ministry is planning to increase oil production to more than four million barrels per day in the next five years; this in turn will pump an extra US$ 1.7 trillion into government coffers over the next 20 years.