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The majors could commit $20 billion into rebuilding and developing Iraqi oil and gas fields but moves so far have been delayed by the deteriorating security situation as well as a lack of definitive legal guidelines for foreign investment.
US Energy Secretary Samuel Bodman pressed for a clear legal framework during a July visit to Baghdad declaring it would be instrumental in attracting foreign investment to Iraq's oil sector.
Raising output
The government has said it aims to produce 3.5 million b/d of oil by the end of next year and 4 million b/d by the end of 2008 and up to 8 million b/d by the end of 2010. The targets are considered by outsiders impossible to achieve without multi-billion dollar investment from international oil companies.
Most companies have already identified areas of the country particularly in the southern provinces where they would like to explore. France's Total is looking at Majnoon and Bin Umar, Spain's Repsol at Nasiriyah and Shell at Ratawi.
Prime Minister Nouri al-Maliki's oil advisor Thamer al-Ghadhban says negotiations could take up to a year to conclude once rules of investment are established but he suggests talks should run alongside parliament's discussions about legislation.
A complicating factor is the question of regional power with politicians split according to religious and ethnic loyalties. Kurds, for example, have been used to a large measure of autonomy even during Saddam's time. The constitution is still vague on whether the country's mineral wealth is controlled by central government or by the regions in which it is located.
Autonomy push
Kurdish leaders are pressing for their autonomy to be enshrined in the country's laws. However, this could set a marker for others also seeking much looser ties with central government in parts of the country which contain some of Iraq's richest oilfields.
The legal situation has not prevented three smaller European oil companies starting wildcat exploration in Iraq's less troubled Kurdish region. The three are Canada's Heritage Oil, the UK's Sterling Energy and Norway's DNO with the latter already making a commercial discovery at Tawke in the Zakho region close to the Turkish border.
Reports suggest that the field could contain a reservoir of 100 million barrels. Plans are going ahead for production of up 20,000 b/d to start in 2007 rising to a potential 200,000 b/d.
Officials say the northern region has proven reserves of 3.6 billion barrels and possibly as high as 45 billion barrels. Such attractive statistics may also lure larger international oil companies to the region if Iraq's promised hydrocarbon law is not passed as promised by the end of 2006.
