Even though Iraq has the world's second-largest oil reserves, after Saudi Arabia, oil companies do not expect to reap the benefits quickly if Saddam Hussein is ousted.
Those companies, of course, admit they are eager to develop Iraq's vast oil fields, but they see Iraq as one more oil-rich country that will deal with them only on the toughest terms.
"For any oil company, being in Iraq is like being a kid in FAO Schwarz," said one senior European oil executive. "The Iraqis need the foreign money and technology, and they will have to go to the international oil companies for that. But oil is their blood, and they won't give the shop away."
Oil companies, industry executives and experts say, will be reluctant to invest in Iraq unless they have a wide variety of guarantees. On the broadest level, foreign oil companies question how stable Iraq would be in the wake of war. More to the point, some executives and analysts have said, oil companies worry about how the Iraqi oil industry would evolve. For which oil fields would the Iraqis want foreign involvement? What kinds of contractual terms would any new Iraqi government offer? What legal protections would companies working in Iraq have for their investments?
What is already apparent is that within the Iraqi oil bureaucracy, "there is close to unanimity" that "natural resources should remain under the sovereignty of the state," said a recent paper presented at a recent energy conference in Houston by Issam AR al-Chalabi, a former Iraqi oil minister and now an independent consultant based in Amman, Jordan.
"Foreign oil companies are definitely interested in Iraq, but they agree that it will take a while to get there," Chalabi said. "The current mood among oil companies is to wait and see. They're not in a hurry. Rather, they're waiting for the picture to become clearer. And I don't blame them."
International oil companies already understand that getting a piece of the most promising oil fields in places like Russia and the Middle East, is as easy as trying to dig out of prison with a spoon, and oil executives said they expected such difficulties in Iraq.
In the Persian Gulf particularly, where oil is the primary source of income, most nations drive an exceedingly hard bargain with foreigners for access to their fields. For example, despite years of negotiations, deals to develop natural gas fields in Saudi Arabia and oil fields in Kuwait remain distant. And because of such limited access to the world's best new fields, the global oil giants are finding it harder every year to increase production substantially.
"The Iraqis may be caught between two tendencies: speed, which means attracting oil companies as soon as possible and that means offering favorable terms, and nationalist feeling," said Vera de Ladoucette, a senior director at Cambridge Energy Research Associates, a consulting group that sponsored the recent conference in Houston. "It requires finding a balance between attracting the oil companies and keeping as much for Iraq as possible. And that is a fine balance."
Since 1968, Iraq's oil potential has been nurtured by a government agency, the Iraq National Oil Co, considered by most in the international oil industry as among the world's more capable state-run companies. Unlike employees of other government-run oil companies, staff members at Iraq National built their careers on merit, not on political affiliation, said Raad Alkadiri, a director at PFC Energy, a consulting group in Washington. Even during the lean last decade, under UN sanctions, the engineers have kept fields pumping, despite the damage from the Gulf War and, since then, Iraq's severely limited access to technology and spare parts.
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