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Iraq to turn up oil tap this year

BY FITCH ASA

DUBAI -- Four years after war-scarred Iraq enlisted major oil companies to develop its oil fields, the country is about to turn up the tap.

Output is set to rise sharply in coming months with help from new oil fields in the south, Hussein al Shahristani, the Iraqi deputy prime minister for energy, said in Dubai on Tuesday.

The biggest contribution will come from the gigantic Majnoon field, where Shell last week began testing production. Output there is expected to rise to almost 200,000 bopd before the end of the year, Shahristani said at a conference in Dubai.

The Halfaya field in southeastern Iraq should add another 50,000 bopd before the end of the year.

"There are increases in other fields, so in total we should add at least 300,000, perhaps more like 400,000 bbl," he said.

As Iraq is producing about 3.3 million bbl a day at present, that would make about 3.6 million or 3.7 million by the end of the year, he said.

The best market for the new oil in terms of cost would be Asia, he said, adding that Iraq wants to ship to different places as insurance against interruptions in trade routes. Iraq is also looking to ship oil through Syria along an established route once the civil war ends there.

"We hope that as soon as this Syrian situation stabilizes -- the country will have to be rebuilt again -- that Iraq will use the old route through Syria, implemented through new pipelines, where we will be able to ship Iraqi crude to the Mediterranean through Syria as well as Jordan," he said.

In 2009, Iraq signed huge contracts with some of the world' s largest oil companies to rebuild an industry in disrepair after a decade of international sanctions and two Gulf wars.

The country is now OPEC' s second-largest exporter, after Saudi Arabia. Its production surpassed that of Iran partly as a result of the Western sanctions imposed on Tehran for its nuclear development.

Earlier this month, Petronas and Japan Petroleum Exploration Co. began pumping 35,000 bopd from Iraq' s Garraf oil field in the south for the first time. Output from the field is expected to reach 230,000 bopd in 2017.

Russia' s largest oil producer Lukoil, which is operating the West Qurna-2 field, is also expected to start first production of 150,000 bopd from the field by the end of the year. The southern Halfaya oil field, which is operated by PetroChina, is producing some 100,000 bopd.

Under Iraq' s recently formulated Integrated National Energy Strategy, or INES, Shahristani said the country was looking to raise production capacity to 9 million bopd by the end of 2020.

Iraq should get to about 5 million bopd of capacity in the next few years, he said, and the goal envisioned by the INES was reasonable, although Iraq' s actual production "will depend on market demand and how competitive Iraq is."

The Iraqi government' s testy relationship with Kurdistan' s regional government remains a sticking point, and could affect the country' s overarching energy development plans, he said. The central government has told Gazprom Neft, Exxon Mobil and Total to choose between their contracts in the south and those in the northern Kurdistan region.

Exxon has agreed to sell a 25% stake in its project to PetroChina and a 10% stake to Pertamina. It owns a 60% total stake.

Baghdad and the Kurdistan regional government are at loggerheads over who should control the oil wealth in the region.

Dow Jones Newswires

09/24/2013

 

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