Subscribe free to our newsletters via your
. 24/7 Space News .

Violence, bottlenecks threaten Iraq's new oil strategy
by Staff Writers
Baghdad (UPI) Jul 12, 2013

Iraq's troubled government is drawing up a new energy strategy that envisions investment of $620 billion in the next 17 years to triple production to 9 million barrels per day by 2020.

But, just as global industry experts decried Baghdad's original target of 12 million bpd by 2017 as way too ambitious, they're now saying the new blueprint is beyond reach as well.

They blame crippling infrastructure bottlenecks, abysmal governance, a lack of skilled workers and the ever-present security crisis, in which hundreds of people are slaughtered every week.

Iraq has crude oil reserves estimated at 150 billion barrels, the fourth-largest reserves of conventional oil in the world, and gas reserves of 122 trillion cubic feet, the 12th-largest in the world.

The country's long-neglected oil industry, battered by decades of war, insurrection and international sanctions, has made a remarkable recovery since Saddam Hussein was overthrown in the U.S.-led invasion of 2003.

Much of that is due to international oil majors who signed 20-year production contracts with Baghdad in 2009-10, marking foreign oilmen's return to Iraq for the first time since Saddam nationalized the industry in the 1970s.

The companies -- including BP, China's CNPC, Royal Dutch Shell and France's Total -- have restored and expanded fields, particularly the megafields across southern Iraq, where two-thirds of Iraq's oil lies.

Production has risen from around 1 million bpd to about 3 million bpd today, and in 2012 Iraq overtook traditional foe Iran to become the second-largest producer in the Organization of Petroleum Exporting Countries.

The International Energy Agency, the West's Paris-based energy watchdog, predicts Iraqi production will hit 6.1 million bpd by the end of the decade as Baghdad strives to challenge Saudi Arabia's production rate.

"But storm clouds threaten Iraq's revival," oil analyst Guy Chazen cautioned in The Financial Times. "Bottlenecks are undermining continued production growth: weak government institutions mean contracts for crucial infrastructure projects are not being awarded quickly enough. A deficit of skilled workers is dogging the industry."

Jessica Brewer of the Edinburgh-based energy consultancy Wood Mackenzie said, "There are a lot of issues that are out of Western oil companies' hands, such as Iraq's infrastructure constraints.

"There's a shortage of pipeline, storage and pumping station capacity."

This impedes building up vital export levels, which bring in the revenue that will pay for reconstruction.

All this has meant that the increase in production levels over the last two to three years has stalled.

The slowdown has been worsened by a bitter feud between the central government in Baghdad and the independence-minded Kurds in their semiautonomous northern enclave.

They sit on reserves of 45 billion barrels of oil, the fourth-largest in the world, which they are starting to export through northern neighbor Turkey rather than via Iraq's state-owned pipeline network.

On top of that, the Kurds claim the northern Kirkuk oil fields, which hold about one-third of Iraq's reserves, as part of their historical territory. Baghdad refuses to relinquish these fields, and there's now an armed confrontation between the federal government and the Kurds across the north.

Exxon Mobil, Chevron Corp. and Total, along with Russia's Gazprom, have all defied Baghdad and defected to Kurdistan, where they get more lucrative terms and few of the infrastructure problems that plague the rest of the Iraqi industry.

Under the tough production contract terms imposed by Baghdad's Oil Ministry, international companies only get about $2 per barrel produced.

That was an important issue in the defections by Exxon Mobil and the others to Kurdistan. Baghdad is only now starting to think about sweetening the contracts, but whether it will offer enough to keep the international companies happy is another matter.

The issue has played a big part in the foreign companies' reluctance to make further massive investment to boost Iraqi production rates on which Baghdad is clearly is counting.

And it's widely seen as one reason why Baghdad has had to revise downward the ambitious production targets it announced four years ago.

"The majors are entering a period of very large spending decisions as they move to full field development," one Western consultant observed. "But they won't risk huge investments in oil that might not make it to market because of export bottlenecks."


Related Links
Powering The World in the 21st Century at

Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

Stanford researchers say 'peak oil' concerns should ease
Stanford CA (SPX) Jul 12, 2013
Fears of depleting the Earth's supply of oil are unwarranted, according to new research, which concludes that the demand for oil - as opposed to the supply - will reach its own peak and then decline. "Peak oil" prognosticators have painted pictures of everything from a calm development of alternatives to calamitous shortages, panic and even social collapse as the world reaches its peak of oil pr ... read more

Scientist says Earth may once have been orbited by two moons

Dust hazard for Moon missions: scientists

NASA Seeks Information on Commercial Robotic Lunar Lander Capabilities

Orbiting astronaut controls robot on Earth, testing feasibility of CU-Boulder project on far side of the moon

Opportunity Making Progress Toward Solander Point

Mars Rover Curiosity Begins Trek Toward Mount Sharp

Science Team Outlines Goals for NASA's 2020 Mars Rover

Is Mars mission Indian rocket's silver jubilee flight?

NASA Selects Seven Projects for 2014 X-Hab Innovation Challenge

Space seeds could "benefit" traditional Chinese medicines

Kennedy Facilities Key to NASA's Transition

Voyager 1 Explores Final Frontier Of Our Solar Bubble

China's space tracking ship Yuanwang-5 berths at Jakarta for replenishment

China plans to launch Tiangong-2 space lab around 2015

Twilight for Tiangong

China calls for international cooperation in manned space program

Station Astronauts Complete First of Two July Spacewalks

Russia to go ahead with space freighter launch

ISS technology to 'hear' potential leaks

Russian cosmonauts conduct space station tasks in spacewalk

Special group to be set up for inspecting production of Proton-M carrier rockets

Two Rockets Launched From Wallops

Specialists unrelated to Khrunichev to check Proton-M rocket production

Proton Rocket to Stay in Demand Despite Accidents

Hubble Finds a Cobalt Blue Planet

Gaps in dust around stars may not indicate planets as many believe

Hubble Telescope reveals variation between hot extrasolar planet atmospheres

UCSB Astronomer Uncovers The Hidden Identity Of An Exoplanet

Bioengineers Use Adhesion to Combine Silicones and Organic Materials

NASA's OPALS to Beam Data From Space Via Laser

Experts row over 'earliest' Chinese inscriptions find

Designer droplets open new possibilities

The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement