Iraq oil: Baghdad bats its eye lashes at France and Total

The Iraqi government on Thursday stepped up its efforts to woo French business to invest in the oil-rich country, telling Total, the French oil group, it could expect favourable treatment.

On a state visit to France, Jalal Talabani, the Iraqi president, sought to draw a line under differences over the US-led invasion of Iraq in 2003, telling French business leaders they should “show courage and invest in all sectors”.

Mr Talabani directed his strongest entreaty at Total, suggesting that it could win forthcoming tenders to exploit Iraqi fields even if the company did not come in with the highest bid.

“The tender is not only based on figures, we should favour a French offer whatever the figures,” he told industrialists in Paris. “It is our policy, we want to see Total working in our oil fields.”

Christophe de Margerie, Total’s chief executive who made his mark negotiating deals in the Middle East, clearly has his eye on Iraq.

“Not being in Iraq, seems impossible,” he told the FT in a recent interview. But he insisted the financial terms Iraq was offering for fields that were included in its first bidding round earlier this year were “less unattractive” but still too poor.

He said Total was focusing on bidding for fields Iraq was likely to include in its next auction round and on striking a bilateral deal. He said Total was considering an offer to help Iraq build a desalination plant as part of its efforts to win the right to develop the Majnoun oil field in Basra and the Bin Umar oil field in Iraq’s south.

But Mr de Margerie has noted that other oil companies may be setting themselves and Iraq up for disappointment by promising to boost production at Iraq’s oil fields by more than is realistic.

Speaking in New York last week he said that Iraq’s estimate that it could increase its production to 12m barrels a day was “crazy”.

He said: “We know there’s a potential to maybe reach 7m to 8m barrels someday, and that alone would be a tremendous success.”

Iraq currently produces a maximum of 2.5m barrels of oil a day.

Abdelkader Jassem al-Obeidi, the Iraqi defence minister, suggested on Thursday that Baghdad could buy further French military equipment after the purchase of 24 helicopters earlier this year, a move that re-established a 30-year-old defence relationship, which ended with the Iraqi invasion of Kuwait in 1990.

“Iraq attributes a lot of importance to French arms and our confidence in these arms is very high,” Mr al-Obeidi said after a meeting with Hervé Morin, the French defence minister.

President Nicolas Sarkozy has tried to deepen commercial ties between France and Iraq, urging French companies to bid for lucrative contracts there despite the continuing security risks.

Mr Sarkozy visited Baghdad in February and François Fillon, prime minister, travelled to the Iraqi capital in July.

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