Deals with Iraq set to bring four oil giants back

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including those in Russia, China and India. The contracts, which would run for one to two years and are relatively small, would nonetheless give companies an advantage in bidding on future contracts in a country that may be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the US had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies said they were helping Iraq rebuild its decrepit oil industry.

For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity. While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world’s oil patch becomes off limits.

Iraq’s stated goal in inviting back major companies is to increase oil production by half a million barrels a day by attracting modern technology to oil fields. The revenue would be used for reconstruction, although Iraq has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.

The Iraqi Oil Ministry, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.