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December 03, 2010

Iraqi oilfield target is raised and production should have significant ramping within 3 years

ExxonMobil and Royal Dutch Shell have raised their target for oil production from Iraq's West Qurna-1 oilfield by about 22 per cent to more than 2.8 million barrels per day (bpd), a volume equal to the total output capacity of Abu Dhabi.

If all the oilfields for which Iraq has awarded contracts were developed according to plan, its production capacity could reach 13 million bpd "some time after 2017", Mr Ciszuk calculated. That would exceed Saudi Arabia's 12 billion bpd capacity to pump crude.

But most analysts predict the path of Iraqi oil development will be much slower than the ministry's plans, not least because of construction bottlenecks. IHS Global forecasts a "best-case scenario" of 6 million bpd by 2020.

The adjustment follows extensive reservoir appraisal and surveying work on the oilfield in the year since the Iraqi oil ministry awarded a 20-year contract to the companies to develop the field, which is among the largest in the Middle East.

The resulting increase in estimated reserves at West Qurna contributed a large portion of the 24 per cent upward revision in Iraq's total oil reserves to 143 billion barrels that the oil ministry announced in October. A reappraisal of reserves at another field, Zubair, contributed most of the rest.

Production from Iraq´s prized West Qurna Stage 1 oil field should more than triple to 750,000 barrels a day in three years time. The US State department report shows that so far Iraqi oil production has fallen about 100,000 barrels per day from the best levels of 2010. Oil production in November was 2.31 million barrels per day and exports were 1.79 million barrels per day. Exports were off 200,000 barrels per day from the best levels of 2010.


The credibility of the Iraqi oil ministry's update has been improved by the companies' decision to include additional West Qurna reserves in their work plan, said Mr Ciszuk. Analysts were initially sceptical about the revision, regarding it as premature.

However, further boosts to government estimates of total Iraqi oil reserves now seem likely as other international oil producers ramp up their work programmes.

"ExxonMobil and Shell are some of the first companies to show that what a lot of the industry suspected about the Iraqi upside oil reserve potential is indeed true," said Mr Ciszuk. "Modern development and reservoir assessment techniques are able to firm up reserves at a much higher level than previously thought, while modern drilling and production technologies are able to produce from layers that Iraq's national oil industry has not been able to reach."

The West Qurna-1 field was estimated to contain about 13 billion barrels of oil reserves before ExxonMobil and Shell started their appraisal programme. The revised figure has not been disclosed.

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