Petro Showdown

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Yet, amazingly, oil companies are already engaged in a scramble for contracts, despite lethal risks and widespread kidnappings of foreign contractors. While no company will begin real work before the law is passed, several have positioned themselves to start immediately after. Iraqi oil officials and Western execs are gathering at a conference in Dubai early this month to thrash out plans. Chevron and Total have signed a joint agreement to explore and develop Iraq's fourth-largest oil field, Majnoon, near the Iran border. In a similar arrangement, Royal Dutch Shell and the Australian company BHP Billiton are studying another big oil field, Halfaya, in Missan province. Shell is also considering developing vast untapped gas deposits, while China's National Petroleum Corp. has won an agreement to produce oil in the Ahdab field, also in the Shi'ite-dominated south.

Although experts like Shafiq advise against exploring while war rages, the temptations for oil companies to jump in are strong. Since contracts last decades, executives believe they might otherwise be left behind if and when the war ends. In recent months, the urge to get into the game has grown stronger. Back in April, the Colorado energy consultancy IHS estimated Iraq's oil reserves at about double the widely accepted figures--about 200 billion bbl., rather than 115 billion bbl. IHS's stunning finding would give Iraq huge clout in the global oil industry, making it second in reserves only to Saudi Arabia and ahead of Iran.

The hunger among executives and Western governments for a new oil law could backfire, however. As Iraqis see companies sign deals, they say they sense the law is being hurried to suit Western interests. "Politicians who sign it will be consigning their careers to the dustbin," says Kamil Mahdi, an Iraqi oil specialist and senior lecturer in Middle East economics at Exeter University in Britain, who, like Shafiq, has argued that the law should be postponed until war wanes. But to government officials--facing a bankrupt Iraq entirely dependent on U.S. funds--that option seems untenable. "We cannot wait," says Thamir Ghadhban, Iraq's former Oil Minister, who is now the oil adviser to Prime Minister al-Maliki. "We need this." With potential windfalls of $70 billion a year, bloodshed and bombings might not be enough to hold back the oil stampede much longer.