Iraq will keep its options open on how to develop its oil fields despite the popularity of production sharing deals among the industry's major companies, Oil Minister Thamir al-Ghadhban said on Sunday.
Instead of the production sharing agreements favoured by oil majors, Iraq could still award service contracts involving a commission to smaller companies that agree to work in Iraq despite the lack of security, the minister said.
Iraq has some of the world's most prized undeveloped fields, such as Majnoon and West Qorna, but prospects for their development are uncertain. The country is unstable and the leanings of any new leadership emerging from elections due in January is unknown.
"We must not put our eggs in one basket. The government and the Oil Ministry should have flexibility to decide which model to adopt for which field," Ghadhban told a seminar organised by the Iraqi Economics Journalists Union.
"There are small international companies willing to develop Iraqi fields on service contract basis, which is less sensitive politically than production sharing."
Production sharing contracts could last for decades and the companies could book their share of the oil as assets.
Iraqi Oil officials say international companies have started talks with Iraq to obtain data on its oil fields as a first step toward proposing models to develop them.
The companies include BP, ConocoPhillips, Shell and Italian giant ENI as well as smaller players such as Angola's Sonangol, industry sources say.
Planning Minister Mehdi al-Hafedh said this month that interim Prime Minister Iyad Allawi had recommended to the newly formed Oil and Gas Council, which is charting strategy for the sector, that it use production sharing to attract investment.
But Ghadhban said no model had been adopted yet and a consensus must be reached among Iraq's divided politicians to attract foreign investment.
"Any agreement has to be approved by parliament because it touches on sovereignty," he said.
Iraq, which has 112 billion barrels of known reserves, needs $25 billion to double production to 6 million barrels a day by the end of the decade.
The government has earned $18 billion from exporting oil since last year's war, but almost the entire budget is spent on subsidies, salaries and security forces.
Ghadhban said the government had recently allocated $1.2 billion for his ministry to develop oil fields and expand production.
Oil officials say engineering and supply contracts worth $500 million to develop three fields, which have been repeatedly delayed, will be awarded by the end of the year.
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