Iraq oil officials to start crash program for new exploration projects

Jul 09, 2003 02:00 AM

Iraqi oil officials expect to start a "crash program" for new exploration projects in coming months, a sign that the country's existing but battered oil infrastructure will be hard-pressed to ramp production much above pre-war levels.
Salim Razouki, general director of exploration at the reconstituted Iraqi oil ministry, also said that talks are continuing with foreign oil companies over exploration contracts in the country's vast but largely uncharted western desert.

Iraqi oil officials have set a goal of returning to pre-war production capacity, which they peg at some 3 mm bpd of oil, by next year. But actual production before the war was closer to 2.5 mm bpd, and US and Iraqi engineers have struggled with widespread looting and apparent sabotage, which has kept production low and erratic. Fresh oil exports are so far nonexistent.
"To get to 3 or 3.5 mm bpd, it is clear we are going to need exploration and new development in addition to increasing production in the existing fields," MrRazouki said. "We fully expect to start a crash program in the next few months, definitely before the end of the year, to map out new exploration projects," he said. "But that will have to wait until we have our house in order," he added, alluding to the large-scale looting and sabotage that have curtailed production at existing fields and pushed back Iraq's plans to export significant amounts of crude.

Iraq's oil ministry, led by a US-appointed interim CEO and advised by a group of mostly American officials, has embraced the idea of eventually seeking foreign help in exploration and development, but it remains unclear when negotiation over actual projects might begin. Officials have said they will review contracts signed under Saddam Hussein's regime, but the ministry has been largely occupied with restarting fields already in production.
With the capital under US-led occupation and lacking security and many basic services, most major oil companies have shied away from sending representatives to discuss exploration deals, which can take years between the start of negotiations and an oil discovery. A number of large companies have already agreed to develop fields with proven reserves, but even those deals appear to be on hold until a new Iraqi government is in place.

Especially tempting for companies, however, are nine exploration blocks in Iraq's western desert, a largely unexplored stretch of land along the border with Saudi Arabia and Jordan. Many analysts believe Iraq's reserves -- already considered the world's second largest behind Saudi Arabia's -- may grow significantly once the area is thoroughly explored.
Several foreign companies, including Russian producer Tatneft, India's state-owned Oil & Natural Gas Corp. and Indonesia state oil company PT Pertamina negotiated tentative pre-war deals to explore some of the region.
"No one has told me that those agreements are no longer valid, and we are still talking with the companies involved," Mr Razouki said. Tatneft has at least one representative in Baghdad working to secure its rights in the area.

Source: Dow Jones
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