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Iraq seeks quick foreign investment in oil sector

New Iraqi Oil Minister Ibrahim Bahr Al Uloum said Baghdad would welcome foreign investment in Iraq's huge but dilapidated upstream oil industry to help finance reconstruction.

"We welcome all foreign oil companies," said Uloum, representing Iraq at its first Opec meeting since the US invasion. "Foreign investment in the upstream is a good idea."

Nabeil Ahmed Al Musawi, a deputy on Iraq's US-backed Governing Council and a member of its Opec delegation, said Baghdad need not wait for Washington to hand over power.

"Of course the Governing Council can sign a deal," he said. "We cannot delay the development of the economy while we are waiting for the constitution to be fully written."

He said the council was likely to opt first for short and medium term projects.

Confirming the pre-war fears of Russia, France and China, Musawi said US companies were likely to receive preferential treatment to exploit the world's second-largest reserves.

"I think a future government may favour US companies and its allies because they were the first to help us," said Musawi.

Worse still for US oil company rivals, he said Baghdad might seek to sue companies that signed deals with the government of former leader Saddam Hussein after the United Nations imposed sanctions in 1990.

"If we discover some companies have pursued illegal interests in Iraq then we will sue them," he said.

Both Russian and Chinese companies signed deals with Saddam.

Uloum was more diplomatic, saying: "All contracts under the previous regime will be reviewed on a case by case basis. They will be checked against the interests of Iraq."

Baghdad has ambitious output targets that will require $2 billion of investment in the initial stages.

Uloum said he hoped to lift output to 3.5-4.00 million barrels daily by end 2005 and six million million bpd by 2010 from 1.8 million now.

He said Iraq could reach pre-war capacity of some 2.8 million bpd by early 2004, unlikely even if Baghdad can quell the spate of sabotage attacks that have prevented the resumption of exports from its northern oilfields.

The Iraqi minister sought to soothe concerns over Iraq's future in Opec under US influence, saying Baghdad would remain in the cartel as a full participatory member.

Assigning Iraq an Opec quota will be left until production recovers closer to pre-war volumes. "We are leaving this issue for some time in the future," he said.