Iraq to Review Oil Foreign Contracts

Iraq to Review Oil Foreign Contracts

During a meeting with British Petroleum (BP), the Iraqi Oil Minister, Jabar Ali Al-Luaibi, stated that Baghdad wants to review contracts with oil companies to cut the fees that the firms receive when crude prices are low, reported Reuters.

In January, Iraq was in talks with foreign oil companies to link the fees for developing their fields to global oil prices, with the aim to have the companies share the burden of market slow down, according to Mubasher.

Iraq generates 95% of its public budget from oil sales. It has service agreements with companies including China National Petroleum Company, BP, Shell, Eni, Exxon Mobil and Russian Lukoil. These organizations get paid for the extra barrels produced at fields awarded to them through a bidding process.

Current service agreements with oil companies are putting a strain on Iraq’s budget since the government must pay a fixed fee for increasing production at aging fields. Meanwhile, the country’s own revenue has decreased as global oil prices drop.


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