Iraq intends to compensate several major oil companies in talks to develop its oil industry with crude oil, Iraq's Oil Minister Hussein al-Shahristani said Wednesday.
Speaking to reporters as he arrived for a meeting of the Organization of Petroleum Exporting Countries, al-Shahristani said the oil ministry is still working on the compensation details with the Development Fund of Iraq, controlled by the U.S. and the U.N.
"We have sorted out the details of the contracts and the scope of each field," he said, including "lifting extra crude oil to compensate for these technical support contracts."
"The remuneration for the services itself is not much at all but the equipment that will be needed for the development of the fields is quite significant," al-Shahristani said.
"The work of companies that will sign these contracts will be compensated by crude oil," he said, adding "(international oil companies) prefer to be paid back through crude oil and we don't mind."
Iraqi oil ministry officials are close to concluding negotiations with several major oil companies to help redevelop five big oil fields - Missan, West Qurna - Phase One, Zubair and Rumaila in the south and Kirkuk in the north - which al-Shahristani has said would increase output by 500,000 barrels a day.
Officials involved in these talks have said Iraq is likely to sign the Technical Support Agreements with Royal Dutch Shell PLC (RDSB), BP PLC (BP), ExxonMobil Corp. (XOM) and Chevron Corp. (CVX) in the next few weeks. French oil major Total SA (TOT) has joined through Chevron.
Anadarko Petroleum Corp. (APC), leading a consortium of Vitol Holding and the United Arab Emirates' Dome, has also joined the talks, seeking to develop another oil field in southern Iraq.
"We and the (oil companies) are happy with the progress of talks," Al-Shahristani said.
The contracts are seen as a stopgap until a national oil law is ratified. A draft oil and gas law, which will allow foreign companies to invest in the Iraqi oil sector, is still under debate at the Iraqi parliament. Ratification of the law is one of the key targets set by the U.S. administration.
Thanks to a moderate improvement in Iraq's security situation in the last few months, exports have risen. Flows through the northern export pipeline to Turkey have become more reliable, after being the target of sabotage and technical problems for much of the time since the U.S.-led invasion in 2003.
Al-Shahristani also said some 115 companies had registered to compete for oil extraction and service contracts to help develop Iraq's vast reserves, the world's third largest. He said the oil ministry would release names of qualified companies who can bid for oil field development in March.
The minister also said Iraq would announce the first round of tenders to develop its oil fields in the third quarter of this year.
Al-Shahristani said Iraq is currently producing 2.5 million barrels of oil a day and exporting 1.9 million barrels a day.