Azerbaijan , Baku, March 10 / Trend, A.Yusifzade /
Iraqi oil industry has capability to produce 12 million barrels per day and it's a good opportunity for investment, IRNA reported quoting Iran's First Vice-Presidential Deputy for Supervising and Coordinating Economic Policies Ali Agha Mohammadi as saying.
The Iraqi government plans to hold a new oil and gas licensing auction later this year as it gears up for a major push to increase oil output and capture natural gas for electricity generation, a senior Iraqi oil official said, The Wall Street Journal reported.
Iraq has held three bidding rounds in the past few years to auction off 15 of the country's most prized oil and gas fields. However, the oil-rich nation's proven reserves, estimated at 143 billion barrels, could fall sharply within a few years if the country doesn't get serious now about exploring for more oil, said Abdul Mahdy al-Ameedi, head of the country's petroleum contracts office, an oil ministry affiliate.
Iraq also needs to boost gas production and build more gas-fired power plants to increase its power output, currently at 6,500 megawatts, which is less than half the country's needs, he said.
Iraqi oil officials are optimistic that major international oil companies will meet their pledges to significantly increase the country's oil production. They say Iraq could increase oil output to as much as 8 million barrels a day by 2018, though oil analysts expect that target to take longer to achieve.
Ameedi said oil output from three major oil fields being developed by some of the world's biggest oil companies would increase output by nearly 500,000 barrels a day by the end of this year, bringing total output to 3 million barrels a day.
BP PLC so far has increased output at Iraq's Rumaila oil field to 1.275 million barrels a day from 1.06 million barrels, growing to 1.3 million barrels a day in 2011, he said. Eni S.p.A has increased output at Zubair to 270,000 barrels a day from 148,000 barrels and has plans to reach 300,000 barrels a day this year. Exxon Mobil Corp. is expected to increase output at West Qurna-1 in April to 280,000 barrels a day from current output of 230,000 barrels, Ameedi said.
If oil firms live up to their production promises, the deals will eventually push Iraq into the very top ranks of oil-producing countries.
But there are potential pitfalls. For one thing, it remains to be seen whether the recent improvement in security in Iraq is a permanent development. Another open question is whether some fields prove to be more technically challenging than expected.
For example, boosting production in some fields will require injecting a large amount of water into fields to restore pressure, and water-injection projects will require huge new investments. The ministry, however, is still studying the costs involved in a large water-injection project, Ameedi said.
There are also obstacles associated with the country's infrastructure, which will need to improve if it is to support the huge works that companies must carry out in order to increase output.
Ameedi, whose office engineered three bidding rounds in the last two years to auction 15 prized oil and gas fields, said the ministry wants to offer 12 exploration blocks in this latest auction. "The number could be more, or less," he said.
An Iraqi oil expert who worked in the oil ministry until 2010 said most of them would be located in the Western Desert in Anbar province, while others are in the east, south and center of Iraq.
The ministry will also prequalify international firms that were unsuccessful in previous bidding rounds. "We will ask prequalified companies that didn't win contracts in the previous bidding rounds to update their legal and financial data," he said. Those companies would need to submit additional data, including programs on health and work hazards, as well as training.
Iraq prequalified some 48 international companies to take part in the three previous auctions, but fewer than half of them won deals in Iraq.
Although international companies would prefer production-sharing contracts for exploration blocks, Ameedi said the deals would be based on a service contract. But it would be slightly different from the 20-year service contract offered in the previous three bidding rounds.