Iraq managing to increase production

Dec 05, 1999 01:00 AM

Iraq's biggest oil centre is going full bore again despite the hindrance of UN trade sanctions and the need to repair extensive damage from the 1980-1988 war with Iran and the 1991 Gulf War. The boost in production from the ageing wells around Kirkuk, l85 miles north of Baghdad, is helping Iraq earn badly needed hard currency to buy food and medicine for its citizens and spare parts for its oil industry.
Sanctions imposed by the United Nations after Iraq's 1990 invasion of Kuwait have crippled the economy, hitting ordinary Iraqis hard, but UN rules allow oil to be sold to buy necessities for ordinary people. For the first time since sanctions were imposed a decade ago, Kirkuk's wells are producing at their previous capacity of 900,000 bpd, says Adil al-Qazzaz, deputy chairman of Iraq's Northern Oil Co.
He says there are plans to drill 100 new wells this year and add an additional 200,000 bpd output. That would maintain Kirkuk's key role in the Iraqi oil industry, accounting for more than a third of the 3 mm bpd Iraq wants to export by the end of 2000.
Just two years ago, Kirkuk was at its lowest point, with output of just 700,000 bpd of low-quality crude. Officials blamed lack of processing chemicals, spare parts and equipment. But the arrival of hundreds of millions of dollars in equipment and spare parts bought under the U.N.-monitored oil export program let work crews lay new pipelines and replace ageing and dilapidated machinery.

Independent oil analysts in the West are sceptical of Iraq's plans for the Kirkuk field, saying they believe it is on an irreversible decline. Leo Drollas, chief economist for the London-based Centre for Global Studies, predicts Kirkuk's oil reserves will be depleted in 20 years and says output could soon plunge to 600,000 bpd.
Iraqi experts dispute that. They estimate up to 10 bn barrels are still to be recovered from Kirkuk, which Al-Qazzaz says should yield oil for at least 70 more years at the current rate of production. But the Iraqis also acknowledge that billions of dollars of investment will be needed in the field.
Kirkuk has been pumping oil for seven decades. On Oct. 14, 1927, a column of oil sprayed so high from the first Kirkuk well that it could be seen from several miles away, according to industry lore. The gusher was the start of the transformation of Iraq's economy from agriculture-based to one powered by crude.
Iraq's proven oil reserves are the world's largest after those of Saudi Arabia. The UN sanctions generally keep Iraq from earning hard currency. But the U.N.-monitored "oil-for-food" program lets Iraq export up to $ 5.2 bn of oil every six months, with the proceeds used to buy food and medicine for ordinary Iraqis and equipment for the oil industry.
Producing oil worth about $ 25 mm a day, the Kirkuk field is a key asset of President Saddam Hussein's government. Troops ring Kirkuk's 95 square miles of wells to ward off the region's rebellious Kurds, who temporarily occupied the field during a failed uprising after the Gulf War.

Source: AP
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