Iraq sets out a pitch for major foreign investment

* Iraq seeks to attract major oil, non-oil projects

* Ministers promote new laws on investment, hydrocarbons

* Despite foreign interest, some say it's still too early

LONDON, April 30 - Iraq tried to sell itself as a trade and investment hotspot at a London conference on Thursday, but while 300 businessmen and financiers came to listen, their broad response was "let's wait and see".

Iraq's prime minister, oil minister and several dozen senior officials involved in business, banking, finance and trade came to tell the story that the worst is over in Iraq after six years of conflict and the country ripe for major investment.

With a well-educated population approaching 30 million, the world's third-largest proven oil reserves and a burgeoning, entrepreneurial middle-class, Iraq had the potential to become an economic powerhouse in the Middle East, they said.

While that may be true, and while available data point to growth of nearly 10 percent this year, with $10 billion of British projects already in the pipeline, there remains too much legal and security uncertainty for many long-term investors.

More than 200 people have been killed in the past eight days in a series of suicide attacks in Baghdad and elsewhere.

"There's still quite a lot to be sorted out, especially in the oil industry," said Mike Major, the chief executive of the Energy Industries Council, an oil trade association focused on the oil services industry.

"The conditions are getting better in Iraq, but I don't think we're there yet. Security is improving, but it's not on a straight line. I think it's going to happen -- investment is going to boom -- but we're not there yet."

Money is beginning to flow into the country, especially from the private sector, particularly expatriate Iraqis based in the region, in Jordan, the United Arab Emirates and Lebanon.

PRIVATE EQUITY FLOWS

U.S.- and British-based private equity funds are also eyeing up investment opportunities in Iraq. Sectors like pharmaceuticals, agriculture, fertilisers and grains and construction are all on the hunt for risk-hungry capital.

The Trade Bank of Iraq, a state-run project finance and investment bank set up in July 2003, has seen business soar, with profits up more than 40 percent last year and total assets rising to $10 billion, from just $2.8 billion in 2006.

So confident is the bank in Iraq's prospects that it plans to set up its own $250 million private equity fund to invest in mid-size Iraqi-operated ventures. Ashur, an Iraqi-owned investment bank, is also investing heavily in the country.

But while Iraqi investors may feel confident about opportunities and the legal lay of the land, foreign investors still need convincing.

Iraqi officials spent much of Thursday's conference propounding the benefits of Iraq's recently redrafted investment law. But judging from some of the questions from investors, work still needs to be done to make the framework reassuring.

And a hydrocarbons law, which will govern Iraq's oil assets and how the proceeds are distributed, is still some way from being finalised. Major oil companies, such as Shell, BP and Exxon want to see the details in the law before they proceed with multi-billion-dollar investments.

Fawzi al-Hariri, Iraq's minerals minister, told Reuters the law would be finalised by September this year, but other officials played down that forecast, and privately some concede that it could be well into 2010 before parliament approves it.

Oil Minister Hussain al-Shahristani told the conference that if the law wasn't passed in time, any contracts riding on it would just be ratified by the cabinet, but that reassurance was not sufficient to placate some of the major oil investors.

"We don't want to rush anything and we'll just have to let the Iraqi process take its course. But at the moment it's an obstacle for us," a representative of one of the major oil companies looking to invest in Iraq said.