Team Infidel
Forum Spin Doctor
International Herald Tribune
June 6, 2008 By Simon Webb and Ahmed Rasheed, Reuters
DUBAI--Iraq is exporting more oil than it has for years and is on the verge of signing deals with oil majors that could quickly take output higher, oil officials said.
Baghdad expects this month to conclude negotiations for six oil-field service contracts with international companies that could further increase output this year.
The deals could provide the extra 200,000 barrels a day in exports that Iraq wants from the southern Basra terminal by the end of 2008. Basra accounts for most of Iraqi exports, shipping more than 1.5 million barrels a day.
"Provided they are signed promptly, these deals could give quick progress," said an executive at a Western oil company negotiating for one of the contracts. "They are the first step towards real improvement in a sector that has been under stress for 30 years."
Baghdad expects exports in June to reach 2.2 million barrels a day, the highest for monthly shipments since the U.S.-led invasion of March 2003. Baghdad sees exports rising further, to 2.3 million barrels a day, by the end of 2008.
The oil sector has increased output as security has improved, but oil companies remain nervous.
Iraq will contract international oil companies to help manage operations at its largest-producing fields like Rumaila in the south, supplying equipment to refurbish dilapidated infrastructure.
The two-year deals call for a total output increase of 600,000 barrels a day. Once the contracts are signed, Iraq plans to offer the same fields in a bidding round for longer-term development.
The industry needs billions of dollars for its renewal and expansion. The service deals are part of stop-gap measures to attract part of that investment in the absence of a much-needed oil law.
Political disputes have stalled the passage of an oil law through Parliament for over a year. The legislation aims to set the terms and extent of foreign investment in developing the world's third-largest oil reserves, after Saudi Arabia and Canada.
"Considerable progress can be made without the law," said Muhammad-Ali Zainy, senior energy analyst at the London-based Center for Global Energy Studies. "These contracts are a big step forward and will help bring new methods and technology to these important fields."
Improved security has yielded gains of nearly 500,000 barrels a day in northern exports since last summer. Sabotage had kept that production mostly idle since the invasion.
Baghdad hopes to see Kirkuk oil exports up by another 100,000 barrels a day by the end of the year.
The oil minister, Hussain al-Shahristani, said this week that he was optimistic that Iraqi forces would keep security tight at oil facilities, helping to bolster the confidence of foreign investors discouraged by sectarian violence.
Rising output and exports are allowing Iraq to cash in on record oil prices, and they have raised the prospect of an accelerated recovery for its shattered economy.
Iraq has a 10-year plan to lift output from 2.5 million barrels a day this year to 6 million barrels per day, Shahristani said this week. It aims to hit 4.5 million barrels a day in five years.
But for those larger long-term gains, Iraq needs the oil law in place so that international oil companies can play a bigger role in developing untapped fields.
"We remain very cautious in terms of further capacity expansion," said Alex Munton, analyst at the global consulting company Wood Mackenzie. "Iraq has almost reached the point, simply by repairing the damage of the last few years and adding security around main pipelines, of maximum capacity with the infrastructure in place. But there is little likelihood of being able to add to that without much larger-scale investment and the assistance of international oil companies."
Even with the law, major international oil companies have said it would be years before security improved enough for them to be able to send ground staff to Iraq.
They intend to manage the new technical service contracts from outside the country, and will rely on Iraq's state oil companies to execute their plans.
The law is meant to help bridge divides between Iraqi Shiites, Sunni Arabs and Kurds. Control of oil reserves is one of the principal disputes.
The prime minister of the Iraqi Kurdish region said Tuesday that he would take fresh proposals to Baghdad on the oil law in the next two weeks. The Kurds' top energy official said he hoped the law would pass this year.
June 6, 2008 By Simon Webb and Ahmed Rasheed, Reuters
DUBAI--Iraq is exporting more oil than it has for years and is on the verge of signing deals with oil majors that could quickly take output higher, oil officials said.
Baghdad expects this month to conclude negotiations for six oil-field service contracts with international companies that could further increase output this year.
The deals could provide the extra 200,000 barrels a day in exports that Iraq wants from the southern Basra terminal by the end of 2008. Basra accounts for most of Iraqi exports, shipping more than 1.5 million barrels a day.
"Provided they are signed promptly, these deals could give quick progress," said an executive at a Western oil company negotiating for one of the contracts. "They are the first step towards real improvement in a sector that has been under stress for 30 years."
Baghdad expects exports in June to reach 2.2 million barrels a day, the highest for monthly shipments since the U.S.-led invasion of March 2003. Baghdad sees exports rising further, to 2.3 million barrels a day, by the end of 2008.
The oil sector has increased output as security has improved, but oil companies remain nervous.
Iraq will contract international oil companies to help manage operations at its largest-producing fields like Rumaila in the south, supplying equipment to refurbish dilapidated infrastructure.
The two-year deals call for a total output increase of 600,000 barrels a day. Once the contracts are signed, Iraq plans to offer the same fields in a bidding round for longer-term development.
The industry needs billions of dollars for its renewal and expansion. The service deals are part of stop-gap measures to attract part of that investment in the absence of a much-needed oil law.
Political disputes have stalled the passage of an oil law through Parliament for over a year. The legislation aims to set the terms and extent of foreign investment in developing the world's third-largest oil reserves, after Saudi Arabia and Canada.
"Considerable progress can be made without the law," said Muhammad-Ali Zainy, senior energy analyst at the London-based Center for Global Energy Studies. "These contracts are a big step forward and will help bring new methods and technology to these important fields."
Improved security has yielded gains of nearly 500,000 barrels a day in northern exports since last summer. Sabotage had kept that production mostly idle since the invasion.
Baghdad hopes to see Kirkuk oil exports up by another 100,000 barrels a day by the end of the year.
The oil minister, Hussain al-Shahristani, said this week that he was optimistic that Iraqi forces would keep security tight at oil facilities, helping to bolster the confidence of foreign investors discouraged by sectarian violence.
Rising output and exports are allowing Iraq to cash in on record oil prices, and they have raised the prospect of an accelerated recovery for its shattered economy.
Iraq has a 10-year plan to lift output from 2.5 million barrels a day this year to 6 million barrels per day, Shahristani said this week. It aims to hit 4.5 million barrels a day in five years.
But for those larger long-term gains, Iraq needs the oil law in place so that international oil companies can play a bigger role in developing untapped fields.
"We remain very cautious in terms of further capacity expansion," said Alex Munton, analyst at the global consulting company Wood Mackenzie. "Iraq has almost reached the point, simply by repairing the damage of the last few years and adding security around main pipelines, of maximum capacity with the infrastructure in place. But there is little likelihood of being able to add to that without much larger-scale investment and the assistance of international oil companies."
Even with the law, major international oil companies have said it would be years before security improved enough for them to be able to send ground staff to Iraq.
They intend to manage the new technical service contracts from outside the country, and will rely on Iraq's state oil companies to execute their plans.
The law is meant to help bridge divides between Iraqi Shiites, Sunni Arabs and Kurds. Control of oil reserves is one of the principal disputes.
The prime minister of the Iraqi Kurdish region said Tuesday that he would take fresh proposals to Baghdad on the oil law in the next two weeks. The Kurds' top energy official said he hoped the law would pass this year.