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 Royal Dutch Shell PLC (RDSB.LN) last week began
testing production. Output there is expected to rise to almost
200,000 barrels a day before the end of the year, Mr. Shahristani
said at a conference in Dubai.
The Halfaya field in southeastern Iraq should add another 50,000
barrels per day 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 barrels," he said.
As Iraq is producing about 3.3 million barrels 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 the second largest exporter after Saudi
Arabia in the Organization of the Petroleum Exporting Countries.
Its production surpassed that of Iran partly as a result of the
Western sanctions imposed on Tehran for its nuclear
development.
Earlier this month, Malaysia's Petronas Cargali Sdn and Japan
Petroleum Exploration Co. (1662.TO) began pumping 35,000 barrels a
day from Iraq's Garraf oil field in the south for the first time.
Output from the field is expected to reach 230,000 barrels a day in
2017.
Russia's largest oil producer OAO Lukoil Holdings, which is
operating the West Qurna-2 field, is also expected to start first
production of 150,000 barrels a day from the field by the end of
the year. The southern Halfaya oil field, which is operated by
PetroChina, is producing some 100,000 barrels a day.
Under Iraq's recently formulated Integrated National Energy
Strategy, or INES, Mr. Shahristani said the country was looking to
raise production capacity to 9 million barrels a day by the end of
2020.
Iraq should get to about 5 million barrels a day 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 Indonesia's 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.
Write to Fitch Asa at fitch.asa@wsj.com and Hassan Hafidh at
hassan.hafidh@wsj.com
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