"U.S. Advised Iraqi Ministry on Oil Deals"

From the New York Times

A group of American advisers led by a small State Department team played an integral part in drawing up contracts between the Iraqi government and five major Western oil companies to develop some of the largest fields in Iraq, American officials say.

The disclosure, coming on the eve of the contracts’ announcement, is the first confirmation of direct involvement by the Bush administration in deals to open Iraq’s oil to commercial development and is likely to stoke criticism.

In their role as advisers to the Iraqi Oil Ministry, American government lawyers and private-sector consultants provided template contracts and detailed suggestions on drafting the contracts, advisers and a senior State Department official said.

It is unclear how much influence their work had on the ministry’s decisions.

The advisers — who, along with the diplomatic official, spoke on condition of anonymity — say that their involvement was only to help an understaffed Iraqi ministry with technical and legal details of the contracts and that they in no way helped choose which companies got the deals.

Repeated calls to the Oil Ministry’s press office for comment were not returned.

At a time of spiraling oil prices, the no-bid contracts, in a country with some of the world’s largest untapped fields and potential for vast profits, are a rare prize to the industry. The contracts are expected to be awarded Monday to Exxon Mobil, Shell, BP, Total and Chevron, as well as to several smaller oil companies.

The deals have been criticized by opponents of the Iraq war, who accuse the Bush administration of working behind the scenes to ensure Western access to Iraqi oil fields even as most other oil-exporting countries have been sharply limiting the roles of international oil companies in development.

For its part, the administration has repeatedly denied steering the Iraqis toward decisions. “Iraq is a sovereign country, and it can make decisions based on how it feels that it wants to move forward in its development of its oil resources,” said Dana Perino, the White House spokeswoman.

Though enriched by high prices, the companies are starved for new oil fields. The United States government, too, has eagerly encouraged investment anywhere in the world that could provide new oil to alleviate the exceptionally tight global supply, which is a cause of high prices.

Iraq is particularly attractive in that light, because in addition to its vast reserves, it has the potential to bring new sources of oil onto the market relatively cheaply.

As sabotage on oil export pipelines has declined with improved security, this potential is closer to being realized. American military officials say the pipelines now have excess capacity, waiting for output to increase at the fields.

But any perception of American meddling in Iraq’s oil policies threatens to inflame opinion against the United States, particularly in Arab nations that are skeptical of American intentions in Iraq, which has the third-largest oil reserves in the world.

“We pretend it is not a centerpiece of our motivation, yet we keep confirming that it is,” Frederick D. Barton, senior adviser at the Center for Strategic and International Studies in Washington, said in a telephone interview. “And we undermine our own veracity by citing issues like sovereignty, when we have our hands right in the middle of it.”

...Consultants said the advice was necessary because the Oil Ministry, like other sectors of the Iraqi government, has experienced an exodus of qualified employees and lacks lawyers schooled in drawing up contracts....