Iraq sits atop the world's second-biggest proven oil reserves, yet predictions that the ousting of Saddam Hussein could open the floodgates to cheap oil from the Gulf have so far proved unfounded.

The country's daily crude production averaged 1.9 million barrels in February, below the 2.8-million-barrel level seen before the war.

Efforts by the new US-led authorities to revitalise Iraq's oil infrastructure -- ravaged by war and years of sanctions and underinvestment -- have been hindered by frequent sabotage attacks on pipelines and other installations.

The absence of a directly elected government has also delayed any exploration work by international oil majors in Iraq.

"We have no current plans for any activity in Iraq," said a spokesman for British oil giant BP.

"We could only consider any potential activity in Iraq once there was an internationally recognised and stable government in place and if they wish to invite any international company to take part in upstream activity in Iraq."

Despite a string of conferences organised by the United States in locations around the world such as London, Dubai, Amman and Kuwait, to try to persuade firms of the merits of doing business in Iraq, for many potential participants the security risks are still too great.

Some foreign firms, however, thrive on danger.

London-based group Control Risks, which provides companies with political and security risk analysis and advice, opened a project office in Iraq last July.

Yet although US Congress authorised 18.4 billion dollars in emergency funding last year for Iraqi reconstruction, so far individual contracts awarded have been worth millions, not billions, of dollars.

The contracting process has been dogged by controversy and delay.

The lion's share of the work has gone to American companies; Europeans were infuriated in December when the Pentagon excluded firms from countries that opposed the war from bidding on the prime construction contracts.

US firms Bechtel and Halliburton have been the major beneficiaries, with foreign companies having to settle for sub-contracts at best, often for modest amounts attracting relatively unknown firms.

However, European heavyweights such as German industrial giant Siemens and French telecommunications equipment maker Alcatel have secured some work, even though France and Germany opposed the war.

In Britain, one of the few countries to join the US-led attack on Iraq, a clutch of companies have benefited from their government's role as a key ally of the United States.

Britain's HSBC and Standard Chartered were awarded two of the first three licences given to foreign banks for 40 years in Janauary, along with the National Bank of Kuwait.

And engineering firm AMEC was appointed prime subcontractor last month by US group Fluor Corporation, which was itself awarded work worth 154 million dollars to help repair Iraq's electrical infrastructure.

But so far AMEC has only half a dozen workers on the ground in Iraq, with security a top priority.

"The security situation on the ground is very serious and it is something that we take great care about," a spokesman for the company said.

"We have a security team which looks at every single activity or movement that is necessary. It is difficult but I don't think that's a reason to shy away for seeking to do it," he added.

WAR.WIRE