Amec and Koreans in $1bn Iraq Deal

Amec, the British engineering and services group, has signed an agreement with the state-owned South Korean oil company to develop oil production in Iraq.

The Korea National Oil Company (Knoc) wants to invest up to $1 billion in Iraq in order to establish itself there, along with western oil companies such as Shell, which have said they plan to move in as soon as circumstances permit.

Iraq has the world's second highest oil reserves, behind Saudi Arabia.

Knoc has signed a memorandum of understanding with Amec, which provides infrastructure to the oil and gas industry. Knoc has ambitions to expand production from its current total of 19 projects in 14 countries.

A contract would provide valuable oil and gas work to Amec, which lost out earlier this year when it failed to win either of the two major oil redevelopment contracts awarded by the US government under its $18.6bn Iraq reconstruction budget. It did, however, win $1bn worth of reconstruction work on water and electricity systems along with its US partner Fluor.

But the future attitude of the Iraq government - which is due to take over from the American coalition provisional authority on 30 June - is unclear.