Amman (Platts)--6May2008

An Iraqi oil ministry delegation has held talks on technical service
agreements with representatives of international oil companies that did not
attend the previous round of talks in Amman in March, sources close to the
negotiations said May 5.

The latest round of meetings was held between April 28 and May 3 and involved
representatives from ExxonMobil, BP and a consortium led by large US
independent Anadarko Petroleum that included trader Vitol and UAE-based Dome.

The aim of the talks was to reach final agreements on the proposed Technical
Services Contracts (TSC), which the Iraqis are seeking to conclude with the
companies to boost oil production from Iraq's main producing fields.

The negotiations with ExxonMobil concern a TSC for the southern Zubair field,
with BP for the giant Rumaila fields west of Basrah, and with the Anandarko
consortium for the adjacent southern fields of Suba and Luhais.

The talks are complementary to discussions held in Amman in mid-March between
the Iraqi delegation and representatives of Shell on the interim development
of the northern Kirkuk oil field, with Shell and BHP on the interim
development of the three Meissan fields in the south, and with Chevron and
Total on the development of the West Qurna 1 field, also in the south.

The talks were held against the backdrop of the tight time schedule set by
Iraqi oil minister Hussein al-Shahristani to produce signed contracts by June
or risk being dropped, with Iraq opting to go directly to long-term contracts
to develop these same fields.

Sources close to the participants in this phase of the talks told Platts the
negotiations went well and the sides are very close to agreement on most
issues. However, they pointed out there are some issues that need to be
finalized, particularly the key question of oil payments to the foreign oil
companies, which is pending the approval of the UN committee that manages
Iraqi oil revenues.

Pending issues include the method of determining the cost of the contracts by
the companies, whether these will be based on man hours, a lump sum or a
combination of the two. But the sources said they see no major obstacles to
reaching full agreement quickly, particularly if the issue of payments by
crude oil is resolved with the UN.

All the major oil companies participating in these talks are among the 35
companies that were prequalified by the Iraqi oil ministry to bid for the
long-term oil field development contracts when a licensing round is issued,
expected by mid-year. The companies regard the short-term TSCs as paving the
way for longer-term contracts.

The TSCs are regarded as interim two-year contracts to increase production
from each of the fields by 100,000 b/d on a fast-track basis during the terms
of the agreements.

The Iraqi oil ministry hopes to offer these same fields on a long-term basis
possibly by the end of 2009.

The TSC involves mainly technical support, studies and evaluations, technology
transfer, procurement and pre-financing of equipment and materials, to be
conducted mostly from outside Iraq, which is convenient for the multinationals
considering the Iraqi security situation.

--Faleh al-Khayat, newsdesk@platts.com