"U.S. advisers and Iraqi oil officials, now studying how to organize Iraq's vast but dilapidated oil industry, are leaning heavily toward recommending the formation of a large state-run petroleum company. If adopted, the move could sharply curtail the role of international oil corporations for years.

Officials of the U.S.-led occupation have been pushing liberalization in most parts of the Iraqi economy. But in the politically sensitive oil sector, occupation advisers say they strongly support establishing a state-owned company similar to those in neighboring Saudi Arabia and Kuwait.

U.S. and Iraqi oil officials say they believe such a model can attract the massive foreign investment the industry needs. But international companies have been stymied by other state-controlled oil producers in the region, where political sensitivities about foreign interference in the oil sector have kept them out."