* Union threats of strikes, sit-ins may unnerve oil firms
* Iraq says will protect oil firms from unions
* Iraq unions considered weak
By Khalid al-Ansary and Missy Ryan
BAGHDAD, July 17 Iraq will protect foreign firms
against threats from trade unions seeking to block a major oil
deal with BP (BP.L) and China's CNPC, a pillar of Iraq's bid to
renew its struggling oil sector, an official said on Friday.
"The Oil Ministry stresses its rejection of threats and
provocation toward anyone: the government, the ministry, foreign
firms," Oil Ministry spokesman Asim Jihad said.
"The government will protect the companies," he said.
Jihad said promises of strikes or sit-ins, designed to halt
the deal with the BP and partner China National Petroleum Corp
(CNPC), were politically motivated and might be linked to
posturing ahead of Iraq's national elections early next year.
The Federation of Oil Unions of Iraq and the Federation of
Workers Councils and Unions in Iraq vow to mobilise workers
against the government's plans to award the foreign group the
right to develop Rumaila, Iraq's largest producing oilfield.
The 20-year deal was the sole contract awarded in Oil
Minister Hussain al-Shahristani's June 30 auction. It offered
eight major oil and gas fields to foreign firms, as a part of
Iraq's efforts to modernise the sector and boost production that
now stands around 2.5 million barrels per day (bpd).
The unions, adding to other complaints from parliament and
even some within Iraq's state-run oil industry about
Shahristani's contract plans, say the deal would be illegal
because it was reached in the absence of new energy legislation
held up by political bickering between Arabs and Kurds.
But trade unions, effectively banned in 1987 by Saddam
Hussein, lack robust legal protection in Iraq and their
influence is modest. Analysts say it is doubtful they could do
very much to derail such a deal.
While Shahristani faces pressure in parliament, there is
perhaps even greater pressure for quick results in the oil
sector, which needs investment to reverse years of decay and to
boost exports that account for almost all Iraqi government
"The ministry asks its employees not to involve themselves
in political struggles or settling of scores, and to instead
focus on their work," Jihad said, calling the recent union
hullabaloo a "media fuss".
Abdullah Eskander Habib, a member of parliament's oil and
gas committee, said such threats could make firms, already
hesitant about setting up shop in a country just emerging from
over six years of war, think again.
"I believe the union stance will affect foreign companies
coming to Iraq, especially if we take into account the unstable
security situation in Basra. It's well known that capital is a
coward," he said, referring to Iraq's southern oil hub.
Three U.S. soldiers were killed on Thursday by rocket or
mortar fire in Basra, but violence has been relatively rare in
Basra since Prime Minister Nuri al-Maliki battled the Shi'ite
militias and gangs that once controlled the area in 2008.
It is unclear how seriously foreign firms take such threats.
"The unions can sharpen public opinion against the
companies, that's what they can do," said Ali Hussain Balou, the
oil and gas committee head who is a vocal critic of Shahristani.
Balou and others have demanded Shahristani submit the
Rumaila contract to parliament for approval, but the Oil
Ministry says it does not require such a vote.
(Additional reporting by Waleed Ibrahim; Editing by Jon Boyle)