US & Israeli Moves Cause Iran-Syria Split.

On April 24, the Bush administration showed the US Congress photographs and video clips of Israel's Sept. 6, 2007, air raid destroying an alleged nuclear reactor in north-eastern Syria being built by North Korea. Then the White House accused Syria of trying to obtain nuclear strike capability with North Korean help - a charge promptly denied by Damascus. But Syrian President Bashar al-Assad confirmed to Qatar's al-Watan daily of April 24 that Turkish PM Recep Tayyip Erdogan was mediating a peace agreement between his government and Israel. Leaks to that effect had been made on April 22-23, which angered Tehran.

After the Kuwait meeting, Syrian Foreign Minister Walid al-Mu'allem flew to Tehran and met with President Ahmadi-Nejad to hear the latter repeat what he had been saying since coming to office in 2005: Israel was to be wiped off the map. It was a direct Iranian rebuke of Assad's 'Alawite/Ba'thist regime - although Syria was still part of the Iran-led axis. By April 24, two days before Erdogan visited Damascus, it had become clear to Tehran that Assad was counting on a separate deal with Israel and the US. Assad told al-Watan he insisted on the US being part of any peace negotiations with Israel. Assad was also quoted as saying he would only cut his links to Iran, Hizbullah, Hamas and other axis members after he had made sure Israel would return the Golan Heights to Syria. That meant the beginning of a split between Syria and Iran.

Equally striking was a revelation during a US Congressional debate on April 25 that more than 40% of Syria's population now was under the poverty line. Over 20% of Iran's 70m people was under the poverty line. By contrast, Iraq now had a surplus of $30 bn in US banks plus $70 bn of income expected in 2008 as a result of high oil prices. These funds will enable Baghdad to rebuild the country and rehabilitate its petroleum sector once its security has improved.

35 IOCs To Bid: The Iraqi Oil Ministry has qualified 35 IOCs to bid for oil and gas service contracts, officially called technical support agreements (TSAs), as the first phase of its plan to raise crude oil production to 6m b/d by 2013 from 2.5m b/d at present. The ministry said the shortlist had been trimmed from 120 interested companies but declined to say which firms failed to make the cut. A range of criteria were used to rank IOCs for qualification, including technical, financial, legal, training and health and safety standards.

The TSA offers the IOC to earn a service fee for its work and does not give any other rights. The exploration and production sharing agreements (EPSAs) which the Kurdistan Regional Government (KRG) has signed with smaller IOCs gives them the right to book any petroleum reserves they discover and develop, plus a share of production for a period of 25 years. But the TSAs are for fields already discovered. Whether Baghdad will grant EPSAs for areas yet to be explored, as the KRG has done, remains to be seen.

The five-year plan will begin with the first licencing round. This will focus on development of existing fields, including the oil giants South Rumeila and North Rumeila, West Qurna, Zubair, Missan, Kirkuk and the western Akkas gas field. TSAs have previously been signed with IOCs including ExxonMobil, Chevron, ConocoPhillips, Shell and BP; but the scope of their work is limited.

The 35 IOCs qualified to bid are: Anadarko Iraq (US), BG Group (UK), BHP Billiton (UK/Australia), BP (UK), Chevron Iraq (US), China National Offshore Oil Corp (China), China National Petroleum Corp (China), ConocoPhillips (US), Edison Int'l (Italy), ENI (Italy), ExxonMobil (US), Hess Corp (US), Inpex Holding (Japan), Japex (Japan), GazpromNeft (Russia), Kogas (South Korea), LUKoil (Russia), Maersk Oil (Denmark), Marathon Int'l Petroleum (US), Mitsubishi Corp (Japan), Nexen (Canada), Nippon Oil (Japan), Occidental Petroleum (US), ONGC (India), Petronas (Malaysia), Pertamina (Indonesia), Premier Oil (UK), Repsol (Spain), Shell Iraq (UK/Dutch), Sinochem (China), Sinopec (China), StatoilHydro (Norway), Total (France), Wintershall (Germany) and Woodside (Australia).

Oil Minister Hussein al-Shahristani on April 23 said IOCs must sign TSAs before June, or miss the opportunity. His ministry is negotiating five short-term TSAs worth around $500m each aimed at boosting the country's crude oil production by 25%. He had hoped to sign the contracts in March. He said: "June is a bit late, if they are not ready by then we might not really require technical service contracts...we may drop them if they are not signed soon". BP, Shell and ExxonMobil were negotiating a deal each. Shell is negotiating another deal together with BHP Billiton, while Chevron and Total together are working on a fifth deal.

Wood Mackenzie says the scale of Iraq's remaining oil resources surpasses all other countries in the Middle East, including Saudi Arabia, and its high-quality reservoirs ensure that production costs would be very low.