Safer Iraq Said Needed for U.S. Investment
Tuesday, June 27, 2006; 8:24 AM
HOUSTON -- Iraq's instability has kept foreign oil companies from investing in reconstruction, compounding what officials see as a litany of woes confronting the country's once-dominant oil sector from corruption to poorly maintained fields.
While the world's thirst for oil grows, untapped Iraqi reserves and current production that still hasn't met prewar levels remain a problem with no imminent solution.
Only when Iraq's newly formed government guarantees a safer environment will the billions of dollars needed begin to flow, analysts and officials say.
"It's too soon to make a judgment on how close we are. ... I suspect we could be a few years away," Shell Oil Co. President John Hofmeister recently told The Associated Press.
Hofmeister and peers from other oil and gas companies will address the issue and others Tuesday at a three-day conference featuring U.S. and Arab government and business leaders.
On Monday during the U.S.-Arab Economic Forum in downtown Houston, ConocoPhillips Chairman and CEO James Mulva it's too soon to tell when Iraq will be ready for a complete commitment.
"Iraq certainly is a country with incredible resources," he said. "We've said all along we're very interested in ultimately going into Iraq."
The situation with Iraq's energy sector is among the most dire in the Middle East, analysts say.
From April 2003 to October 2005, there were more than 280 attacks on Iraq's energy infrastructure, according to the Energy Information Administration.
There haven't been enough improvements since, warns an April report by the Special Inspector General for Iraq Reconstruction, which was critical of task force protection efforts.
Jim Placke, senior associate for Cambridge Energy Research Associates, said more progress is essential.
"Until that situation becomes much-improved from where it is today, you won't see any activity," he said. "It's important to seriously act on these things. The world continues to use an increasingly higher amount of oil; therefore those reserves become more valuable."