The size of the prize is undisputed. Proven Iraqi oil reserves stood at 115,000 million barrels at the end of 2001, making it second only to Saudi Arabia in terms of oil wealth. However, steady deterioration of infrastructure during the sanctions regime has reduced total oil field capacity to an estimated 2.8 million b/d. Imports of oil equipment have also been limited under the UN oil-for-food programme. Energy analysts estimate that it would take at least five years to push Iraqi production capacity up to 4.5 million b/d, well below the average Saudi production of 7.4 million b/d this year.

Few of the concession agreements signed with IOCs have come into effect. TotalFinaElfof France has received assurances that it will be awarded the development contract for the 6,000 million-barrel Bin Umar field, but along with about 30 other companies it has had to sit out the UN sanctions regime. Among others, ONGC Videshof India, Zarubezhneftof Russia and the Royal Dutch/Shell Grouphave all been promised concessions by the Iraqi government.

A high proportion of Iraqi promissory notes have not been backed up with official signed agreements. Petrel Resourcesof Ireland is still waiting for the go-ahead for an exploration and development contract at a 10,000-square-kilometre block in the Western Desert, where the company says initial feasibility studies indicate there are viable deep structures. 'We know we have the recommendation of the oil ministry, but we have been waiting for a signature from the Office of the Presidency for over a year now,' says Petrel chairman John Teeling. 'Still, we are making frequent visits to Baghdad and have kept in consultation with the people in the ministry.'

The prospect of regime change has also raised doubts as to whether a new Iraqi administration would honour past agreements with IOCs. However, analysts have pointed to the experience of Venezuela, where, despite targeting foreign oil companies in his campaign rhetoric, President Chavez did not revoke contracts signed by the previous government when he came to office. 'The main thing is we know and can work with the people in the oil ministry,' says Teeling. 'Even in the event of a regime change, most of them will still be there and we will be one of the first companies to hand.'

There is still money to be made from the Iraqi oil sector through legitimate channels. Since mid-September TotalFinaElf, Eniof Italy and Repsolof Spain have signed bilateral deals - with UN approval - to deliver Iraqi oil to the market. Iraq's crude exports under the oil-for-food programme averaged 1.7 million b/d in 2001. A further 100,000 b/d is exported by truck to Jordan under a special dispensation from the UN, while industry analysts estimate that some 150,000-180,000 b/d of crude is being pumped through the Kirkuk-Banias pipeline to Syria.

About 79 per cent of the 1 million b/d of Basra Light lifted from the Gulf terminal of Mina al-Bakr last year was imported by North America.