Iraq opens oil reserves to Western companies

1.00pm - By CLAYTON HIRST

Iraq has issued an open invitation to the world's largest oil companies to exploit its vast reserves.

The interim government believes it can double oil production by 2010 if it exploits existing facilities and develops new fields. But it thinks that the only way to do this is by involving the West's energy giants.

Iraq currently produces under 3 million barrels of oil a day.

Thamer Ghadban, the country's Oil Minister, said: "We believe that there is at least 2.5 to 3 million barrels per day of new oil production capacity that could, in the long term, be added to our production levels."

In an interview in a Shell newsletter that is distributed to its Middle Eastern clients, Mr Ghadban added that Iraq would open its doors to the oil giants early next year.

"We would like to open a dialogue with international oil companies [IOCs]. We are now formulating our policies ... and we think there is room for IOCs in Iraq - in particular in the upstream because we need new investment."

Western oil companies have shown a reluctance to get involved in Iraq because of the security situation.

The Iraqi Oil Ministry was forced to cancel a conference in April when most companies pulled out after a surge in violence in the country.

Today, neither BP nor Shell has any staff working there. Shell has one consultant in Iraq and it is monitoring developments from its Dubai office. A spokeswoman refused to say if it was planning to send employees to the country.

But she added: "Iraq does offer opportunities. We are following developments and working with the Iraqi Minister of Oil."

A BP spokesman said that the company would only consider opportunities in Iraq when "there is a proper regime" in the country.

However, the British Consultants and Construction Bureau, which represents British business overseas, believes that security in Iraq will improve after the January elections.

"I have told Prime Minister [Iyad] Allawi that I want the BCCB to lead the first trade mission to Iraq," said Graham Hand, the organisation's chief executive.

- INDEPENDENT