Iraq: 1-year limit on no-bid contracts

The contracts sparked a backlash because they involve major Western oil companies.

There are concerns that granting such contracts to Western oil companies could feed perceptions that U.S.-led forces toppled Saddam Hussein to seize the world's third-largest oil reserves.

Iraqi officials have stressed that the contracts are only for technical advice and equipment and the companies will receive money in return, not a share of oil production. They say the deals are a stopgap measure to boost oil production until open bidding ends next June on the development of six major oil fields and two natural gas fields.

But some believe the no-bid deals could give the Western firms an advantage in the larger bidding process, which Oil Minister Hussain al-Shahristani said last month would include 35 foreign companies. The firms he named included seven from the U.S., three from Britain and others from countries like Russia and China.

Five of the oil fields up for longer-term development--Rumaila, Zubair, West Qurna 1, Maysan and Kirkuk--are also included in the no-bid contracts under negotiation, a senior oil official said Thursday. For this reason, the Iraqi government decided to limit those short-term deals to one year instead of two, he said.

"We want to avoid any overlap in this process," the official told The Associated Press, speaking on condition of anonymity because he was not authorized to talk to the media about this issue.

He said the government will soon ask the majors to submit one-year proposals.

Al-Shahristani was expected to announce the completed contracts at the end of last month. But he said the government was still negotiating the deals because the firms wanted to participate in oil field production rather than simply provide consultancy services for cash.

Neither al-Shahristani nor the senior oil official named the companies involved.