Caveat investor: Assessing the risks and rewards of IOCs entry into Iraq

As Iraq begins to emerge from the widespread destruction of thirty years of war, its first order of business should be to create a hydrocarbon policy that can lead to cascading levels of successful economic, social and political development. This will prove to be an enormously complex undertaking, but it is the only path to regaining its historical stature. Despite the lingering resentment of the consequences of foreign influence in the country, Iraq must now rely on the modern technologies of international oil companies (IOCs) in order to increase the production of their oil and gas fields. The risks are great for both the host government and the foreign investor, but the rewards can be even greater with the proper alignment of goals. Iraq must create meaningful incentives and assurances if it hopes to attract the type of investors that can help it achieve its revenue and reconstruction goals. The IOCs must determine if they have the patience, understanding and determination to succeed in this unique investment theater. In simple terms, entry into the Iraqi hydrocarbon sector should be viewed as a value investment whose worth should increase over the term of any potential agreement.