Iraqi Oil Contracts Durable, Officials Say

http://www.officialwire.com/main.php?action=posted_news&rid=132879&catid=863

by NewsDesk - iWireNews ™

iWireNews ™ and OfficialWire)

BAGHDAD, IRAQ

A new Iraqi government faces stiff penalties with international oil companies if it scraps contracts signed under the caretaker administration, officials said.

Iraq had parliamentary elections March 7. None of the leading collations, however, secured enough of the vote to unilaterally form a new government.

Iraq, meanwhile, signed a series of lucrative oil deals with international companies, giving Baghdad the confidence to say it would one day rival Saudi Arabia in terms of oil production.

Analysts worry, however, that any new government that forms following the March vote could endanger the oil contracts.

Sabah Assaidi, the deputy head of legal affairs for the Iraqi Oil Ministry, said the contracts contained penalty measures that bind the Iraqi government, Iraq's satellite channel al-Sumaria reports.

The contracts, Assaidi said, include provisions that "impel" the government to compensate oil companies heavily for damages that could occur from contract cancellation.

Baghdad earlier this week formed the state-run Middle Oil Company, which Assaidi said could produce more than 400,000 barrels of oil per day during the next few years.