A stand-off between Iraq and Iran over a remote oil well ended peacefully Sunday as Iranian forces pulled back from the disputed site. In Baghdad, officials approved a preliminary deal with an international group to develop one of Iraq's most prized oil fields.
Together, the events highlighted the economic and diplomatic challenges facing Iraq as it tries to expand its reach in the global oil market. In Iraq's southern Maysan province, soldiers escorted about a dozen oil workers back to well No 4 on the al-Fakkah oil field after Iranian forces withdrew overnight. Iraqi soldiers planted the Iraqi flag on the well where Iran's flag had flown during the dispute that began last Thursday.
``The problem is solved now,' Abdul-Karim Elaibi, Iraq's senior deputy oil minister, told The Associated Press. Diplomatic talks over the disputed border were continuing, he said.
Well No 4 stopped producing oil in the 1980s as a result of the Iran-Iraq war, but ``Iranian harassment' started in 2007 after Iraq worked to get the well operational again, he said.
Both Iran and Iraq claim parts of al-Fakkah as their own. Located about 200 miles (about 320 kilometers) south-east of Baghdad, the oil field has an estimated 1.5 billion barrels in reserves.
In Tehran, the office of Iranian Foreign Minister Manouchehr Mottaki said he and his Iraqi counterpart, Hoshyar Zebari, discussed the case in a phone conversation late Saturday.
Mottaki said Iran was committed to talks with Iraq through a joint border committee and blamed ``foreign elements' for causing disruption echoing earlier Iranian accusations that foreign media had tried to undermine ties between the two countries, according to a statement on the Web site of his office. Meanwhile, in Baghdad, Iraqi officials signed a preliminary deal with an oil consortium led by European giant Royal Dutch Shell PLC and Malaysia's state-run Petronas.
The deal, which still must be approved by Iraq's Cabinet, is critical to the country's post-war recovery. It is aimed at boosting Iraq's oil exports and bringing in money to help rebuild after the 2003 US-led invasion and decades of neglect and international sanctions under Saddam Hussein.
Iraq has not been able to raise output to even close to pre-2003 levels and, with outdated technology, is limping along at roughly 2.5 million barrels per day. That's well short of Iraq's goal of joining the ranks of other heavyweight members of the Organisation of Petroleum Exporting Countries.
Ten deals that Iraq awarded to foreign investors in bidding rounds held earlier this month and in June are expected to help increase the current production to 12 million barrels a day within six years. Shell-Petronas won the right to develop the southern Majnoon oil field with estimated reserves of 12.5 billion barrels during Iraq's second round of post-war bidding, which offered 15 oil fields earlier this month. Under the 20-year contract if it is ultimately approved two companies will be paid $1.39 for each barrel produced, with a 35 percent income tax applied on the fee.
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