BP and Shell lined up to redevelop Iraq's oilfields

BP and Shell are among a select group of energy majors who are to be invited by the interim Iraqi government to invest in redeveloping the war-torn country's oilfields.

Ibrahim Bahr al-Ulum, Iraq's newly appointed oil minister, is to send out invitations in the next few days to a conference to be held before the end of this year. Oil companies will be asked to come up with detailed plans for investing in the oilfields.

Mr Ulum was in Vienna last week for the Opec meeting and stayed on in Europe for meetings with executives from the top oil companies. It is understood Shell and BP were on the list of companies he wanted to talk to.

The oil majors are keen to join in the opening-up of the Iraqi oilfields, which have the second largest reserves in the world, after Saudi Arabia. Oil production has been hit by years of underinvestment while Saddam Hussein was in power, combined with sabotage in the months since the US-led invasion.

However, the oil companies want a government that is internationally recognised and has the support of the Iraqi people.

For the US, getting the oil flowing is critical. Paul Bremer, the administrator of the provisional government, told the US Congress last week that he wanted to raise money to pay for the invasion by mortgaging future oil revenues from Iraq.