ISTANBUL, Jun 27, 2007 (Dow Jones Newswires)
Iraq's top oil and gas advisor said Wednesday that oil contracts signed during the Saddam era by China, Vietnam, India and Indonesia would be amended within the framework of the country's proposed oil law.
Thamer al-Ghadhban, who advises Prime Minister Nouri al-Maliki on oil policy, said he expected the long-delayed draft law to be in front of lawmakers within two months, adding deals signed by India's state-run Oil and Natural Gas Corp.Ltd. (500312.BY) and Indonesia's PT Pertamina were among those that would be revisited.
"The Chinese, the Vietnamese, ONGC and Indonesia's Pertamina have already signed contracts which will be respected and amended," he said. Russia's OAO Lukoil Holdings (LUKOY) "will be considered, but its contract was canceled by the government. "As for Total (TOT), it started a dialogue, but never signed a contract," he said. Al-Ghadhban continued:
"These contracts will not be canceled, they will not be required to bid again, they just have to be amended."
He said the draft law clearly states the Ministry of Oil has to amend those contracts in line with the new law.
Iraq's oil minister, Hussein al-Shahristani, was in Beijing this week to discuss cooperation, Gadhban said. "China is very important for us - their Ahdab field is in a fairly safe area, but it will be amended," he said. "It was signed based on vertical drilling, but as it is in a fertile area, we need to change the contract to horizontal drilling so not to disrupt the fertility of the nearby area."
Speaking at energy security conference hosted by Cambridge Energy Research Associates here, Al-Ghadhban added contracts signed by the semi-autonomous Kurdish Regional Government since the removal of Saddam Hussein will be "reviewed and amended and then submitted to the federal council for approval."
Small Norwegian company Det Norske Oljeselskap AS (DNO.OS) is among the handful of minnows in the region that have signed contracts with the KRG. The priority, once the law is passed, will be on maintaining those fields with production, followed by the speedy development of discovered fields.
While wrangling over the content of the oil law continues, the cost of ramping up Iraq's oil production has soared.
While reaching 6 million barrels a day was expected to cost some $25 billion, rising contracting costs could double or triple that figure, Al-Ghadhban said.
"Now, the cost could be much higher. It could be $50 billion or $75 billion," he said.
Al-Ghadhban said once the law is passed, foreign oil firms will be able to negotiate with the oil ministry, the national oil company, or the KRG. "Within two months, the law will be given to parliament. It could be sooner," he said. Iraq, he added, is currently producing just over 2 million barrels of oil a day.
Copyright (c) 2007 Dow Jones & Company, Inc.
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