David Prosser: No need for Iraq to sell its future cheap
Wednesday 01 July 2009
Outlook Yesterday's return to Iraq by big oil didn't quite live up to its billing. There was no shortage of razzmatazz, with bids at an auction of development rights unveiled live on state television. But more than half the oil and gas fields up for sale did not find a buyer.
This is not because the fields in question are unattractive to the world's largest energy companies. On the contrary, 30 years after Iraq nationalised its oil industry, many international companies are very keen to return to the country, which has substantial proved reserves as well as huge potential for exploration.
Rather, the failure to sell some of the fields reflects the narrow terms on which the development rights were offered for sale. And that reflects the huge pressure the Iraq government is under to get these deals right.
The dilemma for Iraq is that the country does not have even a fraction of the cash required to get its oil facilities up to a standard where they will deliver their potential. It thus needs international oil companies to pay for their development. Equally, though, Iraq doesn't want to simply hand over the country's biggest asset – and best hope of a prosperous future – to Western interests.
The good news for Iraq is that big oil needs it more than vice versa. BP, for example, the successful bidder in one of the auctions yesterday, agreed to accept a fee of just $2 a barrel in return for the right to help develop the Rumaila field.
Iraq needs to hold its nerve. In a world where proven resources are dwindling and new oil finds are becoming scarcer – and tougher to exploit – it can afford to play hardball with companies moaning about the terms on offer. Big oil will eventually come back to the table.
- 1 Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
- 3 A pint of water every day is the key to losing weight, scientists say
- 4 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
Nazi gold train: 'Significant' discovery made in Poland
Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Carol Vorderman reveals she is 'covered in burns' after she fell off her treadmill while running naked
TTIP controversy: The European Commission and Big Tobacco accused of cover-up after heavily redacted documents released
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
iJobs Money & Business
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...
£25000 per annum + benefits: Ashdown Group: A large financial services company...
£20400 per annum: Ashdown Group: An established and highly reputable organisat...