France proposing to end embargo on Iraq

France has called for an end to the long embargo on Iraq, raising the prospect of an investment rush into the world's second largest petroleum reserve base.
The French proposal to the UN would take time to translate into higher oil exports, which are already running at full capacity.
But Iraq's huge exploration prospects would give foreign oil firms their most important opportunities since the break-up of the former Soviet Union, and intensify Middle East producers' emerging rivalry for foreign investment and market share.
"The timing of the lifting of sanctions on Iraq is probably the most important long-term issue facing the oil market today," said an analyst. "Iraq's production is likely to be one of the key determinants of oil prices in the coming decade."

The French proposal received a cautious response from the US, implacable in insisting that the oil embargo will not end until Iraq's weapons of mass destruction were properly controlled.
Washington said it planned to propose to the UN Security Council that Iraq be allowed to sell as much oil as it wants to purchase food and medicine for its people.
And diplomats say Britain could be receptive to a trade-off later in the year between lifting the oil embargo and arms control.
That would bolster Iraq's hopes of adding some 3 mm bpd of output from a vast oil industry isolated for more than 8 years.
Iraq has already pushed output to 2.8 mm bpd -- near pre-war production of 3.15 mm -- and has escaped disruption from periodic military clashes.
Yet the lack of investment and repairs has brought Iraq's production and export facilities to the brink of collapse, creating a pressing need for new foreign capital.

Lifting the embargo is likely to see Iraq move swiftly to complete long-germinated deals. Iraq is in negotiations on more than 20 production sharing contracts, some of which have already been initialled.
Iraq has especially sought to strengthen its ties with permanent U.N Security Council members China, Russia and France -- the latter two owed vast pre-Gulf War debts by Baghdad -- by tying them into lucrative post-embargo oilfield deals.
Russia's Lukoil has signed for a $ 3.5 bn development of the southern West Qurna field, while Chinese National Petroleum will invest $ 1.2 bn in the central al-Ahdab area.
French firms Total and Elf are earmarked respectively for the 500,000 bpd Bin Umar and 300,000 bpd Majnoon fields.
But both French firms have held off from completing a formal contract until sanctions are ended, while Russian and Chinese firms are only performing preliminary work.

The potential bonanza in Iraq's 112 bn barrel reserves, promises a feeding frenzy from the world's biggest oil firms, with ENI , Repsol, Petronas and BHP also showing interest. Shell confirmed last month that it was in talks for a $ 1.3 bn development of the southern Ratawi field.
Iraq's return would have rather substantial implications for other Gulf producers, undermining their slow reopening to cost-cutting foreign technology.
Iraqi projects would be a strong competitor for the foreign capital now being wooed by producer powers such as Iran and Kuwait.