Deals Fuel Increase in Output of Iraq Oil
(Dow Jones Newswires), Jan. 10, 2011
Iraq has raised crude-oil output by some 300,000 barrels a day, to about 2.7 million barrels a day, since a handful of foreign oil companies began redeveloping some of the country's biggest fields, according to a senior Iraqi oil official.
The gains represent some of the first, early fruit from two rounds of oil-licensing deals between Baghdad and big, international oil companies. Abdul Mahdy al-Ameedi, head of Iraq's Petroleum Contracts and Licensing Directorate, said in an interview Saturday that the gains were sustainable.
"We are hoping to reach a total of three million barrels a day by the end of 2011," Mr. Ameedi said. The upbeat assessment is the latest from Iraqi oil officials, who started to predict an uptick in oil output late last year, as international companies that won development deals in 2009 started drilling, mostly in Iraq's oil-rich south.
Iraq has set a target of raising daily output to some 12 million barrels a day in less than a decade. Iraqi oil output has been stuck at 2.5 million barrels a day or less since it recovered after the U.S.-led invasion in 2003.
Many experts, including international oil executives and even some Iraqi oil officials, say the 12-million-barrel target is unlikely to be met. Already, companies have complained about the difficulty of getting supplies into Iraq amid big bottlenecks. Tricky engineering problems, including how to finance and build a massive water-injection system needed to boost output in future development, are unresolved.
But even a more-modest increase in output would be welcome news for Iraq and the world. Iraq relies on oil sales for roughly 95% of its revenue. At the same time, global oil prices are climbing again, hovering recently around $90 a barrel for U.S. benchmark crude.
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