Iraqi oil minister called to explain deals

The Iraqi parliament has summoned the country's oil minister to answer questions about the benefits of his plan to welcome back international oil firms this month after more than three decades. A spokesman for the ministry said eight services contracts would be awarded at the end of this month to the winners of Iraq's first post-war oil and gas licensing round, despite new calls for the government to postpone or cancel the deals.

"Our technical committees entrusted with organising the awarding session on June 29 and 30 are proceeding so that the first bidding round will be carried out on schedule," Asim Jihad, the spokesman, told Dow Jones. But on Tuesday the oil minister, Dr Hussein al Shahristani, and senior executives of Iraq's state-owned South Oil Company (SOC) and Iraq Drilling Company must appear before parliament to explain why foreign companies are needed.

The summons follows public criticism of the proposed deals from Fayad al Nema, the SOC director general. The contracts "would put the Iraqi economy in chains and shackle its independence for the next 20 years", and would be a waste of Iraq's oil revenues, Mr al Nema said on Monday. He and 20 other senior SOC officials said in a memo that Iraq had so far spent about US$8 billion (Dh29.38bn) to rehabilitate oilfields included in the bidding round, and that it was not reasonable for foreign companies to share the fruits of that investment.

The fields produce about 80 per cent of Iraq's crude output of 2.45 million barrels per day. The officials' objections were unexpected because Mr al Nema was only recently appointed to head SOC and was presumed to be loyal to Dr al Shahristani. Mr al Nema's predecessor, Kifah Numan, had criticised the minister for delaying approvals for technical work that might have stemmed production declines from Iraq's big southern oilfields.

Mr Jihad said that Mr al Nema's comments had been "meant to shake international companies' confidence in the oil ministry's plans to develop the Iraqi oil sector". Separately, 140 Iraqi members of parliament have signed a petition seeking to question Dr al Shahristani over the oil ministry's failure to restore Iraq's crude output to its level before the 2003 invasion. Ali Balou, the head of the committee, said parliament had the power to "hinder, cancel or suspend" any laws written by the government and expected to do so to stop the contract awards.

@Email:[e-mail]