US ambassador criticises Iraq’s oil output

The US ambassador to Iraq has courted controversy by criticising the lack of progress being made in regards to the development of the country’s vast oil reserves.  

Christopher Hill also said that he hoped US companies would be chosen by oil officials in Baghdad to help Iraq significantly increase output.

“Frankly, I think they could do a lot more with their oil resources than they have,” Hill told an interviewer on the CSPAN public affairs network.

Hill recently told Reuters that Iraq making oilfield developments contracts avaialbale to foreign IOCs was also a step in the right direction.

“I think it’s been politically accepted in Iraq that they need to invite foreign oil companies and we hope they’ll continue that. And frankly, I hope we’ll get some American companies in there,” Reuters quoted Hill as saying.

The US ambassador’s comments come after the recent Iraq oil auction held on live television resulted in a solitary contract award. The contracts for the super giant Rumaila field was awarded to a consortium led by British supermajor BP. ExxonMobil had bid on Rumaila, but rejected the terms that were being offered by the Iraq Oil Ministry.

While the Iraq Oil Ministry concedes that the expertise of foreign oil companies is essential if the country is to increase production, it is determined not to sell off the country’s major assets cheaply.

The situation has led to a massive disparity between the price Iraq is willing to pay to foreign firms looking to develop the country’s huge oil reserves and the price the foreign firms are willing  to accept.

Iraq currently has the world’s third largest reserves of oil, 115 billion barrels, but it is thought that up to another 100 billion barrels could be untapped under the country’s  western and southern deserts.