Iraq oil status and possible increases in 2009 and 2010

The US state department reports Iraq oil production for second week of May, 2008 at 2.52 million bpd. (slide 22 of the 35 slide report)

Iraq exporting 1.88-2.04 million bpd, since Sept 2007. The May, 2008 projection is for 2.04 million bpd.

Vitol, Anadarko, and Dome oil companies have formed a consortium currently negotiating with the GOI for a technical service contract. The GOI has been working with other companies on five short-term technical service contracts, each with an approximate value of $500 million. This sixth contract would involve the Luhaisoilfield located in southern Iraq. The deal would increase production at Luhaisfrom 50,000 barrel per day (bpd) to an estimated 150,000 bpd. The GOI hopes that the completion of all deals will result in an increase in output of 600,000 bpd, translating into a more than 25% increase in the country’s daily production over a two year span.

According to Dow Jones, Iraq’s crude oil exports are significantly higher in 2008 than they were at this point in 2007; oil exports have risen 22%. An average of 1.92 million bpd have been exported from Iraq this year, with the bulk (approximately 1.5 million bpd) coming from southern Iraq

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Prior to the Iraq war with Iran in 1980, Iraq had a production capacity of 3.6 million bpd. That was reduced to 3.2 million before the first Gulf War in 1990 and to 2.7 million barrels per day before the start of the most recent conflict.

With a stable political and civil environment, Iraq has the potential to produce four million bpd in the near term, if necessary investments are made in repairing and modernizing facilities, and up to six million. Added to it are the prospects of five undeveloped fields in southern Iraq — Bin Umar, Majnoon, Nasiriyah, West Qurna and Ratawi — that have the potential to pump three million bpd.

On April 9, U.S-based IHS Inc. unveiled full details of Iraq Atlas — the first and only detailed analysis of oil reserves, production and upstream opportunities in the Middle Eastern state. The study — which came in the wake of a year-long fact-finding mission by geologists and petroleum engineers covering 435 undrilled prospects and non-commercial discoveries and 81 producing fields and commercial discoveries — concluded Iraq has (conventional) reserves of up to 116 billion barrels — third in the world after Saudi Arabia and Iran. That equation could easily change. According to the Atlas, if discoveries in Iraq’s Western province are an indication, the pecking order may well be reversed — Baghdad with potential oil reserves of 215 billion barrels, could race ahead of Canada at 193 billion.

“We estimate that there could potentially be another 100 billion barrels in the Western Desert areas,” said Mohamed Zine, IHS regional manager for the Middle East. “It (the desert) is widely regarded as being substantially underexplored, with only one commercial discovery largely because Iraq has had a surplus of oil to date and little incentive for exploration.”

Baghdad hopes to pump an average of 2.6 million to 2.7 million bpd over 2008.