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June 12, 2008

Iraq Oil production could increase by 400,000 bpd by the end of 2008


Following up on Iraq Oil status Oil production and output holding steady at higher levels that started in May. Iraq will produce up to 2.9 million bpd by the end of 2008, Hussein al-Shahristani Iraqi Oil Minister 2.9 million bpd would be an increase of about 400,000 bpd from levels at the end of May, 2008 2.53 million bpd.

Starved of access to oil and gas prospects by governments who increasingly favour development by their state oil companies, Western oil companies are eager to invest in Iraq, home to the world's third biggest oil reserves. However, the security situation and an uncertain legal framework have deterred the majors from making significant investment.

Major oil companies have all turned in their proposals for oil service deals and some will be signed this month. Shahristani had warned that Baghdad might drop the oil service contracts, worth about $500 million a piece, if the majors failed to sign deals by June. Five of the deals under discussion are with Royal Dutch Shell (nyse: RDSA), Shell in partnership with BHP Billiton (nyse: BBL), BP (nyse: BP), Exxon Mobil (nyse: XOM) and Chevron (nyse: CVX) in partnership with Total . Iraq is also in talks with a consortium of Anadarko (APC.N), Vitol and Dome for a sixth contract on the Luhais field.



Dow Jones news reports the Iraqi oil ministry is planning to announce the first round of tenders to develop its vast oil fields, which are among the world's largest, at the end of June or the beginning of July, an Iraqi oil official said Monday.

"Iraq is going to announce the first round of tenders to develop super giant oil fields in southern and northern Iraq either at the end of June or the beginning of July," the official told Dow Jones Newswires by telephone from Baghdad.

The official named seven oil fields and two gas fields that would be included in the first tender announcement. They are North Rumaila, South Rumaila, Zubair, West Qurna, and Buzurgan in southern Iraq and Kirkuk and Bai Hassan in northern Iraq. The two gas fields are Akkaz in western part of the country and Mansouriya in the east.

Over the last few months, the ministry has been working to prepare contract models for these fields, the official said. The ministry has signaled that more restrictive service contracts may be used to develop these fields, rather than controversial production-sharing contracts.

The official said the ministry would hold a news conference to announce these new tenders.

Iraq is currently in the final stages of striking what are called Technical Services Contracts, or TSCs, with oil majors to help boost crude oil production in the country's largest producing fields.

Iraqi oil sources said these TSCs could be signed as early as June. Each would last two years and could be extended for another year.

Oil Minister Hussein al-Shahristani has threatened to cancel these TSCs if they aren't signed in June. The TSCs are designed to boost Iraq's crude oil production from producing oil fields.

Iraq wants to boost production by 600,000 barrels a day in six producing oil fields in northern and southern Iraq. They are Kirkuk in the north, West Qurna 1, Zubair, Missan, Rumaila and Luhais in the south.




FURTHER READING
State Department Iraq Weekly Report for June 11, 2008

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