Oil production in Iraq is at its highest level since the US-led invasion of 2003, reaching 2.4 million barrels a day, thanks largely to improved security measures in the north.
The country’s Oil Ministry will shortly invite international oil companies to bid for contracts to help Iraq to boost output at its investment-starved “super-giant” oilfields. Production is expected to pass the prewar level of 2.6 million barrels by the end of the year, and Hussain al-Shahristani, the Iraqi Oil Minister, told The Times that he expected production to reach six million barrels a day within four years.
The International Monetary Fund predicts that Iraq’s economy, boosted by rising oil revenues, will grow by more than 7 per cent this year, compared with 1.3 per cent last year.
A new report from the US Inspector-General says that the Iraqi Government will receive a $15 billion (£7.5 billion) windfall to help its reconstruction efforts thanks to soaring oil prices.
Mr al-Shahristani said that the Government would not wait for Iraq’s fractious parliament to approve long-delayed legislation providing a legal framework for foreign investment in the oil industry. The Government is to invite foreign companies to help Iraq to develop new fields.
Jeroen van de Veer, the chief executive of the Anglo-Dutch oil company Shell, confirmed yesterday that it was “very interested” in new opportunities in Iraq, which sits on the world’s third largest proven oil reserves. “We have made various proposals to the Government,” he said.
The company is understood to be interested in a gas field called Akkas, in Anbar province near the border with Syria, to produce supplies for export to Europe. Eastern Anbar was until recently one of the most violent parts of the country, although tribal militias have ensured greater security.
Shell, which had worked in Iraq for decades until the 1970s, is also thought to be interested in building an export terminal in Basra for supercooled, liquefied natural gas for export to other parts of the Middle East. A number of other Western oil companies are interested in opportunities in Iraq. They include Total and the Norwegian company DNO, which has a drilling programme in the Kurdish region of Iraq.
Mr al-Shahristani suggested that the competition would be intense. “Everybody in the world, more than 45 companies, have approached us and shown a very keen interest in working with us – the Chinese, Russians, Indians, Brazilians,” he said.
Reliable economic statistics remain almost impossible to collect in Iraq, but US officials said that the Government had cut inflation to 5.5 per cent from 60 per cent a year ago.
The Iraqi dinar has strengthened against the dollar. Property prices are rising in safer parts of Baghdad. But unemployment remains stubbornly high at 18 per cent, and 40 to 60 per cent of the population are employed for less than 15 hours a week.
Foreign investment remains minimal apart from the $3.75 billion paid by three consortiums last year for mobile telephone licences.
The US military is trying to prime the economy by directing contracts worth more than $100 million a month to Iraqi businesses, generating an estimated 42,000 jobs.
On the streets of Baghdad and other cities it is now possible to see new building projects, bustling markets and other signs of economic regeneration for the first time since the war, but confidence remains fragile.
Jalil Khalid, 39, a store manager in central Baghdad, said that business was gradually improving but added: “Every time there’s any stability and people start coming back another bomb goes off and they vanish again.”