Oil Majors to Resume Talks on Iraq Tech Pacts

An Iraqi Oil Ministry delegation completed the first round of talks with senior executives from four oil majors Tuesday and will meet again Feb. 25 to discuss the development of the country's major oil fields, people close to the ministry said Friday.

The talks began in Amman Jan. 24 with executives from Royal Dutch Shell PLC (RDSB), BP PLC (BP), ExxonMobil Corp. (XOM) and Chevron Corp. (CVX), and covered a template for technical support agreements, or TSAs, for producing oil fields which need further development. These include the giant Kirkuk field in the north of Iraq, and the South and North Rumaila structures in the south of the country.

A person familiar with these talks said the TSAs are likely to be signed during a third round of discussions to be held in March.

Iraqi Oil Minister Hussein al-Shahristani said in Vienna last week that development of these fields would increase the country's oil production by 500,000 barrels a day. He also said French major Total SA (TOT) has entered a joint venture agreement with Chevron to develop the giant Majnoon oil fields in the south.

Iraq is currently producing 2.4 million barrels a day from its southern and northern oil fields.

The people close to the ministry also said Iraq is to start talks with smaller companies Vitol Holding, Dome and a third unnamed firm Feb. 22 in Amman. He didn't say which oil fields these companies want to develop.

In addition, the ministry delegation will hold discussions with China National Petroleum Corp. at a later stage this year to discuss the renewal of a contract to develop the 1 billion barrel al-Ahdab oil field in southern Iraq, which was signed during the regime of former president Saddam Hussein, the people said.

The Iraqi delegation to these talks is headed by Natiq al-Bayati, director general of the newly formed Licensing and Contracts Directorate at the Iraqi oil ministry. He is joined by a team of director generals at the ministry, the people added.

They said the talks with Shell were centered on the development of the Kirkuk oil field, discovered in 1927 by the Iraq Petroleum Company in which Shell was a shareholder at that time. Shell, together with Australian BHP Billiton (BHP), will also explore development options for the Missan field near Basra in the south, the sources said.

BP is discussing with the Iraqis development of Rumaila, which it helped to discover in the past and it has recently conducted a technical study, they said. Rumaila, made of South and North, has estimated reserves of 15.5 billion barrels.

ExxonMobil is eyeing the development of Zubair oil field in the south, discovered in 1952 with estimated reserves of 6.1 billion barrels, the sources said.

Chevron and Total are eyeing the development of the giant Majnoon oil field near the border with Iran with an estimated reserve of 12 billion barrels.

The TSAs would be signed under the framework of the country's old hydrocarbon law as its new oil and gas law is still mired in debate at the Iraqi parliament. Iraq has previously said TSAs could be the first step before awarding service contracts to these companies to develop oil fields.

The Iraqi Oil Ministry has invited international oil companies to file registration documentation to bid for participation in the development of some of Iraq's prized oil fields. Several companies have already filed their registration.

Copyright (c) 2008 Dow Jones & Company, Inc.

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