Iraq Drilling Co (IDC) is forging ahead with building its own drilling capacity while waiting for the oil ministry to pick one of its many suitors to establish a new joint venture after the first attempt with Mesopotamia Petroleum faltered last month. “Two years ago no company would come and work in Iraq so we had to go with Mesopotamia even though it had no track record. Today, many reputable and recognized companies are knocking on our door and we think we will be better off with one of them,” Senior Deputy Oil Minister for upstream Abdul Karim al-Luaybi tells me.
If anything, the first bid round in June seems to have unleashed the Iraqi potential. It revealed just how much the Iraqis underestimated the capacities of their producing oil fields. The cumulative plateau offered by the different companies for the different fields offered in the bid round amounted to over 8 million barrels per day. That’s without bringing any new fields on-stream… and there’s no lack of green fields in Iraq.
The current plans are ambitious: a second bid round will get under way next week with a major road show for 15 oil fields bundled into 10 contracts; a third round with several exploration blocks to be offered by year-end; and a busy “national effort” program which aims to develop some of the fields not awarded in June and others not offered for bidding at this stage. IDC will have to shoulder a lot of the work under the “national effort” program and, not surprisingly, it’s racing with time to get its rigs up to scratch.
“We will go for a new joint venture with one or possibly two companies, we will lease about eight additional rigs soon and we will complete the construction of 24 rigs purchased by IDC,” Mr al-Luaybi said in an interview in his office in Baghdad this week.
Five of the 24 rigs contracted are already up and running and three others are currently being constructed on-site. Six others have been delivered and are yet to be assembled. The remaining 10 will follow in the coming months, according to the Iraqi official.
The full-swing upstream development will require an infrastructure to accommodate the increase in output. Next target: an export outlet to the Mediterranean via Syria. A private company has been carrying out inspections in recent weeks on the “western pipeline network” which used to carry crude from Kirkuk to Syria up until the early days of the 2003 war on Iraq. The plan is to rehabilitate the old Kirkuk-Banyas pipeline within a short span of time with a view to build a brand new one to replace the old 700,000 b/d twin line, in the longer term. Neighborly relations are receiving a boost this week as Damascus receives Iraqi Prime Minister Nouri al-Maliki.