Iraq In Talks With Chevron, Exxon For $3 Billion Petrochem Plant

LONDON (Dow Jones)–Iraq is in negotiations with Chevron Corp (CVS) and Exxon Mobil Corp (XOM) towards building a new $3 billion petrochemical facility and is in talks with several other Western firms over industrial projects.

In an interview Thursday, Iraq’s minister for industry and minerals Fawzi Hariri said the discussions with Chevron and Exxon began this week in Washington and are at an early stage.

“It will be one or the other company for this new facility, not both,” he said. “We’re hoping to have a (Memorandum of Understanding) in place by about July.”

Hariri took his first trip to Washington early this week and met with several companies about industrial projects. The other leg of his trip took him to London, where he also met with a number of firms.

The minister, who has been in his post since last June, said the issue of security was a prominent feature of the discussions, given the sectarian conflict that has come to characterize Iraq over the past year. He said he emphasized to the companies that much of the violence has been in Baghdad. “What you see on the television is real…but it’s concentrated in the capital,” said Hariri.

The discussions with the copanies have been greatly aided by an Iraq Foreign Investment Law that won final approval last October, he said. This is unlike the oil and gas sector which could see a law approved in the next couple of months that’s seen as crucial to foreign investors entering Iraq’s troubled oil industry.

Hariri said he hoped discussions with ABB Lummus, a unit of Swiss-Swedish electrical engineering company ABB Ltd (ABB.SK), Dow Chemical Corp (DOW) and KBR Inc (KBR) over rehabilitating existing facilities would lead to tentative agreements by around March. “This is what we’re hoping for but we will see,” he said.

The contract with ABB Lummus could be worth $100 million while Dow Chemical’s contract could be $40 million to $50 million, the minister added. The contract forms for all the deals under discussion would include joint ventures.

While in the U.S., the minister also held talks with the U.S. Geological Survey about performing a nationwide survey of Iraq’s potential mineral base. He said he “had a good discussion” with the Export-Import Bank about possibly providing some of the financing for a nationwide survey to gauge Iraq’s resources.

“We know we have iron ore and we think we have copper and probably gold,” he said, adding that those opinions were based on old data.

Hariri plans to have discussions with General Electric Corp. (GE) over possible power turbine contracts and General Motors Corp. (GM) over contracts for service vehicles, such as fire trucks and ambulances. The latter contract would be worth $80 million or less.

Over the next several years, the minister said Iraq would look to privatize all of state-owned industry, which number around 60 companies. He also said Asian companies were keen to enter discussions with the Iraqi government over industrial contracts.

Hariri said Iraq was also in discussions with San Francisco-based Bechtel Corp over engineering contracts, without elaborating.

The company recently said it was leaving Iraq after suffering through a spree of violence that killed 52 workers. The departure of the firm served as another sobering reminder of how the carnage in Iraq has scrambled the U.S.’s once-grand ambitions to rebuild the country.

By Spencer Swartz; Dow Jones Newswires