Nearly four decades after the four biggest Western oil companies were expelled from Iraq by Saddam Hussein, they are negotiating their return. By the end of the month, Royal Dutch Shell, BP, Exxon Mobil and Total will sign agreements with the Baghdad government, Iraq’s first with big Western oil firms since the US-led invasion in 2003.

The deals are for repair and technical support in some of the country’s largest oilfields, the Oil Ministry in Baghdad said yesterday. The return of “Big Oil” will add to the suspicions of those in the Middle East who claimed that the overthrow of Saddam was secretly driven by the West’s desire to gain control of Iraq’s oil. It will also be greeted with dismay by many Iraqis who fear losing control of their vast oil reserves.

But they mean that the four oil companies, which originally formed the Iraq Petroleum Company to exploit Iraqi oil from the 1920s until the industry’s nationalisation in 1972, will be well-placed to bid for contracts for the long-term development of these fields. The oilfields affected are some of the largest in Iraq, from Kirkuk in the north to Rumaila, on the border with Kuwait. Although there is oil in northern Iraq, most of the reserves are close to Basra, in the far south.

The high price of oil means that Iraq is not under immediate pressure to maximise its oil revenues. The Iraqi parliament has suspected anything which looks like giving foreign companies ownership of Iraq’s oil through a production sharing agreement.

The nationalisation of Iraq’s oil is one the few acts of Saddam Hussein’s long years in power which is still highly popular, and Iraqi members of parliament are fearful of anything that looks like back-door privatisation in the interests of foreigners.

This is something that should been a no brainer–they should have nationalized the industry immediately and that would avoid the possibility of the companies gaining complete control of their fields.  Slowly, but slowly these companies are reasserting their control–good for the companies—but bad for Iraq.