Iraq still sees 4 mln bpd oil output in 2013

BAGHDAD: Iraq can raise its oil output to about 4 million barrels per day in 2013, its deputy oil minister told Reuters, playing down concerns about insecurity and lack of government.

The increase is part of a step change after Iraq last year signed contracts with foreign firms to increase production capacity to 12 million bpd in seven years’ time, which would make it a close rival to leading exporter Saudi Arabia.

Deputy Oil Minister Abdul Kareem Luaibi said the extra output was on track, but would be a gradual process.

There was no hurry, he said, to assign Iraq a production target as part of its membership of the Organization of the Petroleum Exporting Countries as it is still recovering from years of war.

"I think the countries (in OPEC) understand the situation of Iraq," Luaibi said in an interview. "Iraq needs money to rebuild after years of war."

Iraq is the only one of OPEC’s 12 members that is exempt from production curbs and, at some point, analysts expect tough negotiations to decide on output allocations.

Iraq’s oil minister has said there was no need to even discuss an OPEC target until Iraq’s oil output reaches 4 million bpd.

Luaibi did not think 4 million bpd — which would make Iraq the second biggest producer after Saudi Arabia — necessarily meant joining the OPEC system.

"You know, the increase will not be like what some people expected, a button that we push and the number rises up to 12 million," Luaibi said.

"It is not that simple."

Luaibi said Iraq’s production was 2.35 million bpd, and would reach 2.5 million bpd by the end of the year.

In 2011, Iraq projects production to be about 3 million bpd, around 3.5 million bpd in 2012 and 3.96 million bpd the next year, Luaibi said.

Nine Fields
The extra oil will flow from the nine oilfields Iraq auctioned last year, including Rumaila, Zubair, West Qurna, and Majnoon. They are being developed by oil majors such as Britain’s BP, Italy’s ENI, ExxonMobil, Russia’s Lukoil and Royal Dutch Shell.

Oil analysts and industry executives have voiced skepticism against a backdrop of security problems and political uncertainty. An inconclusive election six months ago has yet to produce a new government.

But some firms are even ahead of schedule Luaibi said, citing BP and Eni, which are expected to raise production by 10 percent earlier that expected.

"In the first auction, the required increase is 10 percent within three years. Now in two fields, Rumaila and Zubair, companies will reach the target in a year," he said.

Crude exports, which have been hampered by attacks on export pipelines, technical problems and bad weather in the past months, are expected to reach 1.9 million bpd in September, provided there were no major attacks or stoppages, he said.

Faced with concern a political vacuum could drive an increase in insurgent attacks, Luaibi said Iraq was providing the necessary protection for its oilfields and pipelines.

Iraq is also building and enhancing its export facilities and pipelines in the southern oil hub of Basra to allow extra production to be sold and by the end of next year, Iraq’s oil export capacity will rise by 800,000 bpd, Luaibi said.

In addition, Iraq plans to build a new strategic pipeline from Basra to the northern city of Kirkuk and to Syria.

"There will be one gas pipeline and two oil pipelines, but the priority for us now is the oil pipeline," he said. "Within two months maximum we have to issue a tender for the oil pipeline," he said.

Iraq has plans to build two gas pipelines as part of a master plan to expand gas distribution throughout the country and possibly export any surplus.

Following on from last year’s oil rounds, Iraq plans to auction three gas fields in October.

Analysts have predicted there could be less enthusiasm to enter the gas fields situated at Akkas in the western desert, once an al Qaeda stronghold, Mansuriyah in volatile Diyala province, and Siba in the relatively peaceful southern oil hub of Basra.

Luaibi agreed security concerns could be a deterrent.

"I think there will be less interest by gas companies in Mansuriyah," Luaibi said.

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