The Guardian: Shell hopes Iraq can help to plug oil leak

The Guardian: Shell hopes Iraq can help to plug oil leak

Terry Macalister

Tuesday May 4, 2004

Troubled oil group Shell intends “to establish a material and enduring presence in Iraq” in an attempt to rebuild the firm’s depleted reserves and foster the long term future of the country’s energy sector.

The vote of confidence from Shell, which is embroiled in controversy over exaggeration of its oil reserves, came after rival BP expressed disillusionment with Iraq’s prospects. BP chief executive Lord Browne said last week that private firms might not have a role to play there.

The immediate prospects for Shell pressing ahead with reconstruction remain grim. The contractor, Amec, said last night that its staff in Iraq were “hunkering down”, with its work there halted as the security situation has deteriorated.

The continuing attacks have left Tony Blair and George Bush with big political problems at home, while western industrial and service companies are generally downbeat.

Shell has suffered from internal difficulties with the exit of its chairman and two other directors but needs to find new oil reserves to replenish its dwindling stocks.

“We would welcome the opportunity to help Iraq build its energy industry, once the security situation allows and an internationally recognised Iraq government is established,” a Shell spokesman told the Guardian. ” We are interested in building a long term relationship with Iraqis.”

Shell was keen to outline its position after Lord Browne suggested at BP’s first quarter results meeting that the presence of western oil companies could destabilise a sensitive situation.

“Its not obvious to me you need foreign oil companies to rebuild the energy sector in Iraq and it might best be left to a local, state-owned group,” the BP chief said.

Yet 18 months ago Lord Browne had expressed fears that American energy firms might carve up the spoils in Iraq and leave European firms such as his out in the cold.

Amec was reluctant to comment on the situation in Iraq, where it has built a presence after winning water and power infrastructure deals.

A spokesman in London declined to talk about the cost to the company of security and delays but did confirm that all work has been halted.

“Our people are stopped and hunkering down. All but essential movement in Iraq has stopped for security reasons. Security is paramount, and we take advice every day from our security coordination team.”

Amec is the only big winner of the $18.5bn (£11bn) contract bonanza in Iraq from the coalition forces, gaining three prime management contracts in a joint venture with Fluor of the United States. It has set up a coordination team which is still awaiting its task orders.

Amec is working on a separate power contract in support of Fluor in an area near Baghdad.

http://www.guardian.co.uk/Iraq/Story/0,2763,1208882,00.html

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