Five years after US-led troops invaded Iraq to oust the Baathist government of slain President Saddam Hussein, the new pro-West Iraqi government yesterday opened international bidding for six oil fields that should see the return of major oil giants, notably the US- and UK-based oil companies, which are said to be best positioned to benefit from the decision.

 A team from the US State Department is said to have had a major role in drawing up contracts between the Iraqi government and five major Western oil companies to develop some of these fields, providing confirmation of of direct involvement by the Bush administration in the decison of the Iraqi government, a report in the New York Times said yesterday. The current Iraqi government is dependent on the support of the US and other Western military forces for its survival.

According to the report advisers from the US State, Commerce, Energy and Interior Departments are assigned to work with the Iraqi oil ministry and in addition, the United States Agency for International Development has a contract for Management Systems International, a Washington consulting firm, to advise the oil and other ministries.

The current Iraqi government has so far been negotiating short-term no-bid contracts with several US and European oil companies, that include Exxon Mobil Corp., Royal Dutch Shell, Total SA, Chevron and BP, which strengthens the clims of the critics of the invasion who say the war was meant to wrest control of the region's oil resources.

The latest decision allows foreign oil companies to do business in Iraq for the first time in over 35 years .

The newspaper also said that three Democratic senators, led by Charles E. Schumer of New York, sent a letter to the State Department last week asking that the deals be delayed until after the Iraqi Parliament passes a hydrocarbons law outlining the distribution of oil revenues and regulatory matters. They contend the contracts could deepen political tensions in Iraq and endanger American soldiers.

However the US government has reacted saying that  the deals were purely commercial matters.
 
The six oilfields, Rumaila, Kirkuk, Zubair, West Qurna Phase 1, Bai Hassan and Maysan'sBazargan, Abu Gharab and Fakka, are said to be the backbone of Iraq's oil resources. Iraq is said to have proven reserves, at 115 billion barrels, making it the world's third largest behind Saudi Arabia and Iran. Unproven reserves are said to be thrice as large at around 350 billion barrels.

Iraqi oil minister Hussain al-Shahristani told a news conference that Iraq expected to to raise output to 4.5 million barrels per day by 2013 from the current 2.5 million bpd and was hopeful that the contracts could be signed by June 2009.

According to the oil minister the government is open to long-term development contracts from the foreign oil firms, 41 of which have been 41 pre-qualified for participation. The fields have already been explored and are producing oil and gas, but the equipment is old and outdated, Shahrastani said

Commentators have said the decision to open the fields to participation from western oil giants could boost the country's oil production by 1.5 million barrels per day, while also marking a break from the policy of major oil-producers in the region, mainly Saudi Arabia, Kuwait and the UAE, to keep a tight control over foreign investment in their oil sectors through state oil monopolies or minority joint participation of foreign oil firms.

Shahristani also said that Iraq wanted to sign six short-term oil technical support contracts next month, but discussion with tforegn firms had been bogged down by their reluctance to provide technical support contracts from within the country as Iran wanted, rather than outside. These technical  are worth about $500 million each, aime at raising the country's output from its largest producing fields by 500,000 barrels a day.

He also said the fee-based contracts would not allow the winning companies a share in the revenue from oil sales because "this wealth belong to Iraq only and thus we will not allow anyone to share the Iraqis' oil."

The government hasd been engaged in duiscussing these deals with Royal Dutch Shell; the Shell - BHP Billiton combine; BP; Exxon Mobil; and the Chevron - Total combine and with a consortium of Anadarko, Vitol and Dome for a sixth one, making it a virtual bonanza for the selected oil companies during a period of rising oil prices.

The western oil companies argue that he decision would help increase oil supplies to ease shortages. However, analysts warn that billions of dollars would be needed to raise capacity to a level where it can impact record global oil prices of $140 a barrel. Iraq lacks the means to provide that kind of investment itself.

Moreover, insurgents have frequently targeted vulnerable pipelines as a form of economic warfare

This is not the first time that an arm of the US government has been involved in a major policy decison in Iraq after the ouster of President Saddam Hussein; According to the New York Times report American advisers supported the Iraqi oil ministry's effort to dismiss claims by the Russian company Lukoil to a large Hussein-era deal.

Though the oil ministry says the Hussein government canceled the contract three months before the invasion of the country, Lukoil maintains that the attempt to cancel the deal was illegal because Hussein had not resorted to international arbitration first, as required in the contract terms.