Investors ready for Iraq business as troops pullout

By Luke Baker

LONDON (Reuters) - Major businesses have lined up billions of dollars for investment in southern Iraq, where oil riches and long-term opportunities beckon, preparing to move in even as Britain prepares to pull its troops out.

Foreign investors have earmarked more than $9 billion (£6 billion pounds) for the oil-hub of Basra and the region around it in the next three years, according to Michael Wareing, the co-chair of the Basra Development Commission, a British-Iraqi group, and up to three times as much could be invested in the next five to 10 years.

Royal Dutch Shell has signed a multi-billion dollar natural gas deal with the Iraqi government, which will see it capture flared gas released from oil extraction, and ArcelorMittal has plans to overhaul a steel plant in Basra, a deal that could boost employment in the area.

Mittal Investments, an off-shoot of the Mittal conglomerate, is separately looking at investing multiple millions in a petro-chemicals plant near Basra, Iraq's second largest city.

"Iraq has the third largest proven oil reserves in the world, really you almost can't afford not to be involved," said Wareing, who as well as being the international chief executive of KPMG has spent the past year promoting business in Iraq.

"All companies around the world are seeing their revenue falling, so if there's an opportunity like this to grow into a new area -- provided the numbers work and they've got the money -- they're doing it," he told Reuters in an interview after returning from an Iraq investment conference in Turkey.

A year ago, Basra, a city of around two million people, was regarded as far too dangerous for British troops to operate in, let alone foreign businesses to invest in. There were small-scale ventures, but nothing on the billion-dollar level.

But a two-month operation earlier this year by Iraqi troops, backed by U.S. and some British forces, to rid the city of militia groups had a profound impact on security, military commanders say, and has paved the way for an economic revival.