Tuesday, 9 September 2008

Iraq confirms service agreements scrapped

LONDON, Sept 9 (Reuters) - Technical service agreements under negotiation with international oil companies have been cancelled, Iraqi Oil Minister Hussain al-Shahristani confirmed on Tuesday.
Shaharistani had previously said the probability the contracts would go ahead had decreased after delays in signing.
"The remaining time was too short because the full deal development contracts should come into effect by mid next year," the minister told reporters.
"The remaining nine months was too short for technical support contracts to be effective."
Iraq had wanted six contracts to boost oil output by 100,000 barrels per day (bpd) each to be signed in June and implemented within a year.
The firms that have been negotiating technical service agreements are Royal Dutch Shell , Shell in partnership with BHP Billiton, Exxon Mobil , Chevron with Total
A smaller consortium of Anadarko , Vitol and Dome had negotiated for another deal but Anadarko walked away last month.
Baghdad did not want to extend the end-date for the contracts as it planned to sign long-term deals for the same fields by mid-2009.
A draft oil law intended to set the framework for foreign investment has been long-delayed and Shahristani has said he did not expect it to be approved in parliament in the near future.
But, regardless of the law, he said he planned to go through with a first bidding round and would also announce a second round before the end of the year.
Shahristani was speaking on arrival in Vienna ahead of an OPEC meeting, which was widely expected to keep existing output targets in place, but some members have urged tighter compliance.
"OPEC should stick to its quota," Shahristani told reporters. "The market is well-supplied, if it is not oversupplied."
He said Iraq, the only OPEC member that does not have an agreed production ceiling, had been pumping around 2.5 million barrels per day in early September and aimed for 2.7 million bpd by the end of the year.

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