Big oil steels for worst, hopes for best, in Iraq

By Missy Ryan

BAGHDAD (Reuters) - Pipelines shattered by bombs. Oil terminals crippled by suicide attacks. Officials blown up in roadside blasts or kidnapped from their office at gunpoint.

Calamities like those are not just the worst fear of an oil executive in a hostile environment; they are the reality of the last six years of chaos, bloodshed and war in Iraq.

The world's biggest oil firms are hoping the past will be no guide to the future when they bid on Tuesday for six of Iraq's biggest oilfields and two gas fields in the war-shattered country's first major tender since 2003. Thirty-two foreign firms will be competing, including Exxon Mobil, Total and Royal Dutch Shell.

The winners will get a foothold in a country with some of the world's largest remaining untapped reserves, but they will also have to take precautions to protect their investment.

Iraq is one of the world's most challenging places for energy firms, one western security consultant said, "because the commercial risk is huge and this is still an unsettled place".

Iraq's oil wealth is both a blessing and curse - its reserves of 115 billion barrels, the world's third largest, should allow it to rebuild after years of conflict. But the lure of oil riches also stirs deep rivalries and suspicions.

Many Iraqis believe foreign firms will plunder Iraq's oil, said Hugh McManners, a spokesman at Erinys, a security firm hired by the U.S. government after the 2003 invasion to rebuild the specialised force protecting Iraq's oil infrastructure.

"We can say this negative perception of international oil companies ... is used quite ruthlessly by terrorists and nationalist agitators. It's a good rallying call," he said.