Iraq to open up oil fields for first time in four decades

“It's a rare opportunity,” the source said.

Not all energy companies are happy, though, with the terms of the contracts being offered by Baghdad.

The foreign firms awarded deals to work here will have to partner with Iraqi government-owned firms, principally the South Oil Company (SOC), and share management of the fields despite fully financing their development.

They will be paid a fixed fee per barrel, not a share of the profits, and the fee will only be paid once a production threshold set by the government is reached.

“This raises the question of the profitability of the contract,” the source said. “The companies are the ones investing, but have a big problem with the fact that management will be shared.”

But international energy giants cannot afford to ignore the contracts on offer.

“For foreign companies, this is like a first step,” the source said. “They are saying, 'Let's accept these terms, even though they're not our preferred model, just to stay in the game, and hope conditions improve.'”

In effect, foreign energy executives may well be targeting the next round of contracts to be offered next year, when Iraq will grant licenses for exploitation of 16 other undeveloped fields.

Domestic firms, including SOC, are furious, however, that contracts are being awarded to their foreign counterparts.

Along with the Shiite Fadhila party, which lost control of the Ministry of Oil in 2006, the companies have launched a campaign against Shahristani.

SOC insists it can fulfill the same objectives set for international companies, and in less time.

“The fields in question represent 85 percent of actual production and 50 percent of reserves,” SOC chief executive Fayad Hassan Nima said. “A loss of control would lead to the death of national companies.”

Jaber Khalifa Jaber, head of the Iraqi parliament's oil and gas committee and a Fadhila MP, said Iraq is under threat from an “economic occupation.”

“The companies will just share the oil between the Americans, the French, the British and the Japanese ... just like the Sykes-Picot agreement,” he told AFP, referring to the Anglo-French accord that divided up influence in the Middle East in 1916.

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