VOL. XLVI
No 49
IRAQ
Iraq Announces Near-Term Production Capacity Plan
Iraq is aiming to increase oil production from an average of 2.0mn b/d in November to 2.3mn by end-December and around 2.8mn b/d by the end of 1Q 2004, according to a statement distributed by Iraq’s delegation to the OPEC meeting in Vienna on 4 December (see full text below). These oil production figures should put oil exports at some 1.7mn b/d by the end of this year and at more than 2.0mn b/d by the end of 1Q 2004.
Meanwhile in Baghdad, another statement issued by the Ministry of Oil, also on 4 December, said that four oil pumping stations in southern Iraq have been repaired and restarted, enabling the country’s production to reach more than 1.9mn b/d. It named the stations as Abu Gharib 2 and Southern Fagah in ΄Ammarah province, al-Rafidhiya at al-Zubair field near Basrah and al-Luhais. The four stations were either sabotaged or looted after the war earlier this year. The restarting of the first three pumping stations added 100,000 b/d to production, the head of the South Oil Company, Jabbar Liabi, said. The Luhais oilfield was recommissioned in mid-November and, according to the statement, its repair represented “a big challenge.”
MEES learns from industry sources that 1.9mn b/d is about the maximum that Iraq can produce from all its rehabilitated southern fields. But the bigger question is how much it will be able to export. Basrah Oil Terminal has design export capacity of 1.6mn b/d but can handle up to 1.9mn b/d. While during the first three weeks of November exports of Basrah Light averaged over 1.60mn b/d, SOMO aims to raise this figure to around 1.75mn b/d in the coming months (MEES, 1 December). The nearby Khor al-΄Amaya export facility has over 400,000 b/d capacity, but has yet to be brought back into service. While an announcement of the resumption of exports of Kirkuk crude northwards through Turkey to the Mediterranean is still awaited, there are reports in industry circles that the authorities in Baghdad are quietly taking steps to restock the export terminal at Ceyhan. The authorities are deliberately not publicizing the move for fear of attracting sabotage attacks on the pipeline.
KBR Casualties
Since the war in Iraq two employees of the Halliburton subsidiary Kellogg Brown and Root (KBR) have been killed there, along with six sub-contractors, according to Halliburton executive George Sigalos speaking on 3 December. Furthermore, four KBR staff have been wounded and four sub-contractors are missing. Mr Sigalos was speaking on the sidelines of an Iraq reconstruction conference in Washington – along with Michael Mele, Iraq program manager for the US Army Corps of Engineers. The latter said that sabotage continued to be a concern, adding that “it looks like it is more concerted and better organized than it has been in the past.”
Oil Ministry Statement
The following is the text of the Iraqi Oil Ministry statement distributed at the OPEC meeting in Vienna on 4 December:
Iraq’s oil production and exports have been growing at rates exceeding earlier expectations. Average oil production for the month of November surpassed 2mn b/d and actual production reached 2.1mn b/d, while average oil exports from Basrah Terminal recorded a new peak in its history of oil shipment of more than 1.5mn b/d, which is the highest ever amount of oil exported from this terminal since the start of its operation in the late 1980s.
Capacity Plans
Basrah Light crude oil exports from the port, which was started in 1989 at around 150,000 b/d, increased to about 400,000 b/d in 1997 and to about 1.3mn b/d in the years 2000 and 2001 before dipping to less than 1mn b/d in 2002. Exports increased for the month of November to more than 1.5mn b/d, an outstanding achievement for the Iraqi workers under the most difficult conditions and work environment. We are hoping to maintain this rising momentum to bring total oil production to about 2.3mn b/d by the end of this month and then raise it further to the stated target of about 2.8mn b/d by the end of the first quarter 2004. These oil production figures should put oil exports at some 1.7mn b/d by the end of this year and to more than 2.0mn b/d by the end of the first quarter.
Moreover, Iraq also aims to fully utilize existing refining capacities as well as implementing a very aggressive oil products trade to provide needed quantities of oil products for local consumption. To this end, both the Ministry of Oil and CPA are fully in co-operation to import large quantities from neighboring countries and from other sources. Sabotage of pipelines and oil facilities are causing harm to the population and depriving them of needed oil money for other important and vital economic uses.
The issue of strengthening oil relations with other countries, especially neighboring countries, is high on our list of priorities. In this connection, we have visited our brothers in Saudi Arabia, Qatar, Kuwait and Iran to exchange views and establish new bases for co-operation for the benefit of all concerned. The tour was very successful in establishing new principles for working together to formulate plans and undertake actions in all matters of the oil business, including implementation of joint projects, exchange of information and technical visits, encouragement of inflow of capital, training Iraqi personnel and providing all possible assistance to the Ministry.
Co-operation with international oil companies to provide training opportunities to the Ministry employees and to discuss common acceptable grounds for the development of Iraqi oilfields are under serious consideration and the Ministry has given this issue priority in its near-future plans. The objective is to arrive at a scheme of action which takes into account the speedy development of these fields and the legitimate right of the Iraqi people for optimizing benefit and control of the oil resources.
February Oil Conference In Baghdad
In order to speed up contacts with international oil companies, the Ministry of Oil has decided to hold an oil conference in Baghdad in February 2004. It is hoped to attract interested oil companies to attend and present ideas on the development of oilfields and rebuilding of the oil sector, having their preferences and their intentions for undertaking projects in Iraq in mind.
Finally, it is also important to update you on the question of security which we can say has improved significantly and there are plans to improve it even further. This, we hope, will contribute further to the realization of the Ministry’s plan to reintegrate the oil sector within the rest of the economy and with the outside word.