Iraq awards major contracts to develop gas fields

Image caption,
Iraq hopes the international contracts will help revitalise the country's energy sector

Iraq has awarded contracts for international oil companies to develop three major gas fields in different parts of the country.

The companies won the bidding in Iraq's latest auction for the exploitation of its energy assets.

It is part of a government drive to boost production and provide funds for further development.

The fields are thought to hold 10% of Iraq's total gas reserves, which are among the largest in the world.

The energy auction was the third held in Iraq since the American-led invasion which toppled Saddam Hussein.

The BBC's Jim Muir in Baghdad says the competition and interest were not particularly strong, and the major international companies largely kept out of the picture.

But he says what was notable was that two of Iraq's neighbours, Turkey and Kuwait, were both involved in successful bids for two of the fields, one of which is very close to the Kuwaiti border.

Considering the troubled history between Iraq and Kuwait - which was invaded by Saddam Hussein's army in 1990 - the sight of the Kuwaitis investing in the Iraqi energy field is quite a development, our correspondent says.

But oil industry experts are sceptical about how much the outside companies will get out of the deals.

One said the Iraqis had done well, but that the companies would be hard pushed to make any profit at all out of the price offered per barrel of oil equivalent -- between $5.50 and $7.50.

Security is also expected to be a concern, with two of the three gas fields situated in areas which have seen a lot of insurgent activity in the past.

Our correspondent says the companies are believed to be keen to get involved at this stage so they will be well placed to cash in later.

They are expected to pour huge funds and expertise into developing the fields, which Iraq wants to use - initially at least - mainly to fuel its power stations and industry.

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