Shell suggests more realistic Iraq oil target
BY ALEXIS FLYNN
LONDON -- Iraq may be forced to cut its ambitious oil production targets by as much as 40%, despite recently boosting output to pre-Gulf War levels, a senior Royal Dutch Shell PLC executive said.
Although Iraq has been steadily improving output in recent months -- the International Energy Agency estimates the country has been pumping as many as 250,000 more barrels a day since August -- its plans to produce 11 million barrels a day by 2020 are unlikely to come to pass, according to the Shell official.
Instead, Iraq can realistically expect to boost oil output to between 6 million and 7 million barrels a day, said Ruth Cairnie, Shell executive vice president for strategy and planning. "Iraq has acknowledged that its targets are too ambitious," said Cairnie, who was addressing a conference here.
Shell, which is renovating the giant Majnoon field with Malaysia' s Petronas, is one of the largest oil companies operating in Iraq.
In another interview, the head of Shell' s Iraq operations said the Anglo-Dutch major was in talks with the government about how best to develop the Majnoon field. While he acknowledged that this could mean a reduction in the targeted production plateau level of 1.8 million barrels a day, he stressed that discussions were ultimately aimed at ensuring Iraq' s oil reservoirs were better maintained for longer.
"We' re now in exploratory discussions with the government about the optimal field development plan. A reduction in the plateau, and consequent extension of the field' s life, could be an outcome, but you have to look at that not so much as a Majnoon issue as one in the overall context of what is overall the right production level for Iraq," said Nijkamp.
While Iraq' s deputy prime minister in charge of energy, Hussain al-Shahristani, has set a target of 11 millions barrels a day by 2020, industry analysts and executives have cautioned that this is unrealistic. In particular, the war-damaged country' s lack of adequate export infrastructure and insufficient water supplies -- a key component when pumping crude -- mean this ambition is little more than a pipe dream.
However, this target is actually a revision of the country' s previously stated output goal of 12 million barrels a day. Shahristani last month gave a more circumspect assessment of Iraq' s crude prospects, saying the change of plan was undertaken to "maximize the recovery from each field...and extend the plateau production," to 2035.
Dow Jones Newswires