West's access to Iraqi oil in doubt  

The SMH reports that the Iraqi parliament is trying to "push Shell" out of the country and reject their planned LNG project in the south of the country (see "Iraq's Oil: The Greatest Prize Of All" for some background) - West's access to Iraqi oil in doubt.

EXPECTATIONS that foreign companies can cash in on Iraq's oil riches are in doubt after a key parliamentary body in Baghdad pledged to "push Shell out" and halt a forthcoming licensing round.

The warning from the secretary of the Iraqi parliament's oil and gas committee, Jabir Khalifa Jabir, was seen by financial analysts yesterday as a serious threat to Western investment opportunities in a country that holds the second-largest oil reserves in the world.

Shell has been considered a front runner in the race to seize control of the Iraqi energy sector after signing a $US4 billion ($5.5 billion) deal to process and market gas from the south and ship it, possibly to Britain, as liquefied natural gas.

But the preliminary agreement - and a subsequent deal with China National Petroleum Corporation - were unconstitutional and detrimental to Iraq's economic interests, said Mr Jabir, who worked for more than 15 years at Iraq's state-run Southern Gas Company.

"We are going to do everything we can to revoke this deal and to push Shell out," he said. "Both these deals are illegal because they didn't go through parliament. The companies and their lawyers knew the old Iraqi oil law very well." Any new deals Baghdad signs in bidding rounds under way with BP and others would also be subject to revocation, he warned.

The Oil Ministry has said it does not need parliament's approval to sign new deals but Mr Jabir argued that Iraqi law 97 clearly states all arrangements of this nature must be passed by parliament.

The committee had studied the preliminary Shell deal for the past six months and all members have concluded that it is illegal, he said.

The deal with Shell and the wider oil licensing round have been controversial because many critics believed they were unduly influenced by the United States and Britain, who occupied the country after toppling Saddam Hussein in 2003. Critics saw the invasion as a "war for oil" and believed it would open the way for US and British oil companies to regain assets seized from them decades earlier through nationalisation.

Analysts at IHS Global Insight, an economic forecasting group, said the latest developments were alarming, especially given Shell was expected to formalise its southern gas deal within the next few weeks. "The Shell deal looks increasingly like a litmus test for progress on all Iraq's oil and gas projects, with any potential failure likely to remove most of the political legitimacy from the Oil Ministry's interpretation of Iraq's constitution and oil law," they argued.

Shell declined to comment on Mr Jabir's comments, with a spokesman at the company's head office in The Hague saying they were a "matter for the Ministry of Oil" in Baghdad. But he said: "We believe our experience in large-scale integrated gas projects and knowledge of Iraq has contributed to the decision to work with Shell."