21 February 2003
Unfazed by the prospect of an imminent war, Iraqi oil officials are forging ahead with a 10-year plan drawn up last year, which aims to bring on stream early oil production from discovered but not-yet-developed fields, as well as launch an ambitious oil and gas exploration program to boost proven reserves.
The 10-year plan, which stretches through 2012, aims at almost doubling oil production capacity in the first six to seven years, from a current official level of 3.2 million barrels per day to 6 million b/d, the oil ministry’s director general of planning at the Iraqi oil ministry Thamer al-Ghadban told International Oil Daily in Baghdad this week.
The early development program includes key fields allocated to or negotiated with foreign oil companies.
While the long-term plan could be turned on its head by a US-led war, outside observers say it’s also possible that it could form the blueprint for development of the Iraqi oil sector whoever is in charge — assuming facilities are not destroyed.
According to the plan, most of the incremental output would come from Iraq’s southern oil fields, which currently account for two-thirds of production, by bringing on early production from appraised fields.
Oil fields slated for early production include the giant Nahr bin Umar, together with Majnoon, Nasiriyah, Halfayah, East Baghdad, Ratawi, and Gharraf.
All of these were originally on a list of fields offered to international oil companies to develop, and were discussed with companies from Europe, Russia, the Middle East, and Asia. Nahr bin Umar and Majnoon, for example, were assigned to Total Fina Elf in the 1990s, although Baghdad recently started talks on the former with Russia’s Zarubezhneft.
But ministry officials say there has been no change in plans. “Bringing in early production from those fields does not interfere with future cooperation with Arab and friendly companies. Once any of those companies sign a contract, the field will be theirs to develop further,” said al-Ghadban.
The planned work would even be to the advantage of the companies, al-Ghadban argued. “The information we will acquire on the geology and the performance of those fields will make it easier for the companies to draw up future development plans for the productivity and the future capacity of each,” he said.
Last year, for instance, Iraq started early production from the Majnoon field at 50,000 b/d.
Early production is envisaged kicking in over two to three years, and would bring production at the targeted fields to between 50,000 b/d and 100,000 b/d, depending on the capability and specific conditions of each.
Al-Ghadban also said that Iraq wants to boost its proven reserves. “Iraq has 214 billion barrels of probable reserves and our aim is to convert as much as possible to proven reserves to add to our current 115 billion barrels,” he said.
Such a move would effectively aim to close the gap on the world’s No. 1 oil player, Saudi Arabia. Riyadh has a policy of leaving its official oil reserves essentially unchanged at around 260 billion bbl, simply replacing production with new reserves to keep the total steady. The last significant reassessment was in 1987 and was designed to assert the kingdom’s leadership over rival Iraq.
“Exploration is taking a priority in the government plans in order to better understand, evaluate, and assess our national reserves,” al-Ghadban said. “We intend to introduce seismic [work] across the board in the near future as opposed to just drilling, which has been our main method of exploring so far,” he added.
For the first time, the distribution plan for phase 12 of the United Nations’ oil-for-food program, which ended last December, included Iraqi contracts to purchase 3-D seismic equipment for nine outfits, to add to the three 2-D crews it already has.
In the 12 years since the Gulf War, Iraq has drilled just three exploration wells in three different areas, as opposed to five per year in the 1980s and a peak of 17 wells per year in 1976-77, Iraqi officials say.
Foreign companies, mainly Russian, have had several drilling contracts approved by the UN in the past two years, but these are intended for development, not for exploration. Iraqi officials say $70 million worth of contracts — including seismic ones — for Iraq’s exploration company are on hold at the UN sanctions committee.
Iraq has awarded three exploration blocks in the near-virgin Western Desert to foreign oil companies, but none has so far started work on location.
India’s Oil and Natural Gas Corp., which signed an exploration and development contract for Block 8 in 2000, is due to carry out 2-D and 3-D seismic work in 2003, according to the program agreed at the time of signature.
Indonesia’s Pertamina, which followed suit last April by signing up for the Western Desert’s Block 3, is still in the early stages of acquiring and processing data.
In January, Russia’s Stroitransgas also signed an exploration contract for Block 4.
Next in line, to sign a contract for Block 7, is a Belarussian duo of Belmetalenergo with Belgeologia. Iraqi officials say they are in the final stages of negotiations.
In addition, Russia’s Tatneft recently launched negotiations for Block 9.
By Ruba Husari, Baghdad
(Published in International Oil Daily Feb. 21, 2003)