Some industry analysts estimate Iraq will be able to boost production to nearly 3 million bpd by the end of 2011 and hit 4.5 million by 2015, largely due to greater output from the major fields that have been under-producing for years.
Iraqi officials, however, are quietly backpedaling on Bagh-dad’s announced plans to boost production to as much as 12 million barrels per day in six years to a more modest 8 million bpd. Still, that figure would be double Iran’s current output.
This cutback in expectations is largely because the country’s oil infrastructure is so dilapidated after decades of war, insurgency, international sanctions and neglect that it cannot support such an ambitious project, United Press International reports.
The country’s 4,500-mile pipeline network, a vital element in exporting oil, is barely able to handle current production levels.
The Oil Ministry says production reached 2.7 million barrels per day in December. That’s a modest increase but underlines the upward curve in production after foreign companies took over major fields last year.
Indeed, that figure is the highest monthly output total since the US-led invasion of Iraq in March 2003. However, it’s below the 3 million bpd the country produced in the late 1980s after the eight-year war with Iran.
Still, with the advanced drilling and production techniques foreign companies are using in Iraq, it isn’t surprising that output is already climbing.
Most of the increase came from the giant Rumaila and Zubair fields in southern Iraq that are now operated by BP and Italy’s ENI respectively under 20-year production contracts awarded in December 2009.
But few see the government of Prime Minister Nuri al-Maliki achieving its announced target of 12 million bpd by 2017 to challenge Saudi Arabia as the world’s leading producer.
Indeed, Thamir al-Ghadban, one of al-Maliki’s senior advisers, was quoted as saying that 8 million bpd was a far more realistic production figure by 2017.
Other Iraqi officials have echoed Ghadban’s estimate while Western analysts say it is a far more realistic figure than the target of 12 million bpd that has been the Oil Ministry’s mantra for a year or more.
There may be political factors involved, such as allaying concerns in the Organization of Petroleum Exporting Countries (OPEC).
Increasing production to 12 million bpd would dramatically reshape the global oil market and put Iraq on a collision course with other members of OPEC, including both Iran and Saudi Arabia.
Iraq’s recoverable oil reserves are pegged at 143 billion barrels, the world’s fourth largest proven reserves of conventional crude after Saudi Arabia, Venezuela and Iran, which now claims 150 billion barrels in reserves.
Upgrading Iraq’s infrastructure will be an immense task and could cost as much as $150 billion, according to the International Energy Agency (IEA) in Paris.
“Basic infrastructure, including roads, bridges, airports and water supply are all in need of repair and expansion,” it said. “A major expansion of shipping ports will also be needed.”
The pipes are so poor that one Western diplomat observed recently, “In some cases, the only thing holding the pipelines together is the sludge in them.” Baghdad has started a $50 billion modernization plan.