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June 7, 2011
Iraq's oil industry looks for OPEC growth role
As OPEC leaders prepare to meet in Vienna on Wednesday for their first gathering since unrest engulfed the Middle East and sidelined Libyan oil production, Iraq is emerging as one of the members most able to boost the group's output in the next few years.
Iraq, which now produces about 2.7 million barrels of oil a day, is eager to lift its oil revenue stream after three decades of lost or low production brought on by the 1980-86 Iran-Iraq war, the first Gulf War of 1990-91, and the U.S.-led invasion of 2003.
At the weekend, Deputy Prime Minister Hussain al-Shahristani said Iraq was ready to support an increase in OPEC output if that was the decision by the 12-nation organisation, which accounts for about one-third of the world’s oil supply. He said Iraq was likely to reach 3 million barrels a day by the end of this year, with a further increase next year as infrastructure improves.
In March the Iraqi Oil Ministry said the country was on track to reach 5.6 million barrels a day by 2014. By 2017, that figure could reach 12-13 mb/d if a lid is kept on insurgent activity and if progress goes smoothly with pipeline upgrades and long-term production-expansion contracts Iraq has signed with some of world’s biggest oil companies.
Iraq is a founding member of the Organisation of Petroleum Exporting Countries (OPEC), whose 11 other current members are Algeria, Angola, Ecuador, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
OPEC’s formal production target is 24.84 mb/d, although the International Energy Agency estimated last month that OPEC’s April output was 28.8 mb/d, which it said was “1.3 mb/d below pre-Libyan crisis levels.”
OPEC says in its latest Monthly Oil Market Report that “in 2011, required OPEC crude is expected to average 29.9 mb/d,” and notes that for the rest of the year “the growth drivers will continue to be the developing economies, particularly China and India.” According to figures by the energy information provider Platts, China’s apparent oil demand in May was 9.37 mb/d, the third-highest month on record.
Iraq, which has the world’s fifth largest proven oil reserves behind Saudi Arabia, Venezuela, Canada and Iran, is now seen as one of the more attractive investment destinations in the Middle East.
At an oil industry conference in London last month, observers rated it as highly prospective. Gati al-Jebouri, executive director and chief commercial officer for Russian energy company LUKOIL Mid-East, told the Platts conference that just a fraction of Iraq’s known fields were in development, and the world’s next big oil or gas field was likely to be found there. Iraq’s reserves, he said, “have barely been exploited.”
Mr Jebouri said that while Iraq was not part of OPEC’s quota regime it was likely to be reinstated before 2015. He said that if the same ratio was applied to Iraq as to Iran, then Iraq’s oil quota would be around 3.5 mb/d. But it was likely that to compensate for Iraq’s low production rate over the last 15 years, the actual quota could be set between 5-6 mb/d.
LUKOIL Mid-East’s assumption was that Iraq’s production would grow from 2.45 mb/d in 2010 to 3.15 mb/d next year, 5.58 mb/d in 2013, 8.28 mb/d in 2014 and 10.71 mb/d in 2015.
However, he warned those figures could be impacted by security and infrastructure constraints, such as pipelines, storage, reservoir management and the availability of oil rigs.
“So this suggests it would be more reasonable to extend the process,” he said.
Platts Middle East editor Kate Dourian.told the conference most experts thought a realistic number for Iraq production would be 8.0 mb/d from 2020 onwards. This is still well above the EIA’s World Energy Outlook estimate of about 4.8 mb/d.
At the weekend, Hussain Qaragholi, a managing partner with investment fund Phoenix Capital, said on the Platts Energy Week television program that Iraq now represented “the most opportune investment globally” as it focused on rebuilding its economy.
On the same program, Kenneth Kuhn, managing director of the Iraq Fund, a U.S.-based hedge fund, cited IMF projections of annual growth rates of 14 per cent for the next five years for his view that Iraq was “the most significant global investment opportunity in the world.”
On Sunday Iraq also signed two contracts to develop gas fields that it hopes will give fresh impetus to its energy industry. The contracts, covering the Mansouriya and Siba fields, are with Korea Gas Corp., Kuwait Energy Co. and Turkey’s Turkiye Petrolleri.
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Iraq's oil industry looks for OPEC growth role
As OPEC leaders prepare to meet in Vienna on Wednesday for their first gathering since unrest engulfed the Middle East and sidelined Libyan oil production, Iraq is emerging as one of the members most able to boost the group's output in the next few years.
Iraq, which now produces about 2.7 million barrels of oil a day, is eager to lift its oil revenue stream after three decades of lost or low production brought on by the 1980-86 Iran-Iraq war, the first Gulf War of 1990-91, and the U.S.-led invasion of 2003.
At the weekend, Deputy Prime Minister Hussain al-Shahristani said Iraq was ready to support an increase in OPEC output if that was the decision by the 12-nation organisation, which accounts for about one-third of the world’s oil supply. He said Iraq was likely to reach 3 million barrels a day by the end of this year, with a further increase next year as infrastructure improves.
In March the Iraqi Oil Ministry said the country was on track to reach 5.6 million barrels a day by 2014. By 2017, that figure could reach 12-13 mb/d if a lid is kept on insurgent activity and if progress goes smoothly with pipeline upgrades and long-term production-expansion contracts Iraq has signed with some of world’s biggest oil companies.
Iraq is a founding member of the Organisation of Petroleum Exporting Countries (OPEC), whose 11 other current members are Algeria, Angola, Ecuador, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
OPEC’s formal production target is 24.84 mb/d, although the International Energy Agency estimated last month that OPEC’s April output was 28.8 mb/d, which it said was “1.3 mb/d below pre-Libyan crisis levels.”
OPEC says in its latest Monthly Oil Market Report that “in 2011, required OPEC crude is expected to average 29.9 mb/d,” and notes that for the rest of the year “the growth drivers will continue to be the developing economies, particularly China and India.” According to figures by the energy information provider Platts, China’s apparent oil demand in May was 9.37 mb/d, the third-highest month on record.
Iraq, which has the world’s fifth largest proven oil reserves behind Saudi Arabia, Venezuela, Canada and Iran, is now seen as one of the more attractive investment destinations in the Middle East.
At an oil industry conference in London last month, observers rated it as highly prospective. Gati al-Jebouri, executive director and chief commercial officer for Russian energy company LUKOIL Mid-East, told the Platts conference that just a fraction of Iraq’s known fields were in development, and the world’s next big oil or gas field was likely to be found there. Iraq’s reserves, he said, “have barely been exploited.”
Mr Jebouri said that while Iraq was not part of OPEC’s quota regime it was likely to be reinstated before 2015. He said that if the same ratio was applied to Iraq as to Iran, then Iraq’s oil quota would be around 3.5 mb/d. But it was likely that to compensate for Iraq’s low production rate over the last 15 years, the actual quota could be set between 5-6 mb/d.
LUKOIL Mid-East’s assumption was that Iraq’s production would grow from 2.45 mb/d in 2010 to 3.15 mb/d next year, 5.58 mb/d in 2013, 8.28 mb/d in 2014 and 10.71 mb/d in 2015.
However, he warned those figures could be impacted by security and infrastructure constraints, such as pipelines, storage, reservoir management and the availability of oil rigs.
“So this suggests it would be more reasonable to extend the process,” he said.
Platts Middle East editor Kate Dourian.told the conference most experts thought a realistic number for Iraq production would be 8.0 mb/d from 2020 onwards. This is still well above the EIA’s World Energy Outlook estimate of about 4.8 mb/d.
At the weekend, Hussain Qaragholi, a managing partner with investment fund Phoenix Capital, said on the Platts Energy Week television program that Iraq now represented “the most opportune investment globally” as it focused on rebuilding its economy.
On the same program, Kenneth Kuhn, managing director of the Iraq Fund, a U.S.-based hedge fund, cited IMF projections of annual growth rates of 14 per cent for the next five years for his view that Iraq was “the most significant global investment opportunity in the world.”
On Sunday Iraq also signed two contracts to develop gas fields that it hopes will give fresh impetus to its energy industry. The contracts, covering the Mansouriya and Siba fields, are with Korea Gas Corp., Kuwait Energy Co. and Turkey’s Turkiye Petrolleri.
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