Iraq To Develop Two Oil Fields In the South

Iraq's South Oil Co. plans to develop two oil fields that will add around 100,000 barrels a day to production initially with further increases possible, the head of the company said Wednesday.

The company has tendered for equipment to start work on the Subbah field, which could produce up to 250,000 barrels a day, and plans to double production from the Luhais field, Abdul Jabbar al-Luaybi told reporters.

The investments would add 50,000 barrels a day of output from each field, although a lack of cash and equipment may delay the company's plans, Luaybi said.

Production from Iraq's southern fields stands at 2 million barrels a day, he said. The Iraqi Oil Ministry in Baghdad aims to increase output from the south to between 2.5 million and 3 million barrels a day.

"We are targeting 50,000 barrels a day from Subbah, which can be increased gradually to 100,000 barrels a day and 250,000 barrels a day," he said.

Subbah is about 100 kilometers north of Basra. Luhais, about 70 kilometers northwest of Basra, is already producing about 50,000 barrels a day, Luaybi said.

A planned restart next month of the south's water injection system could also increase production from the North and South Rumeila fields, which account for the bulk of the crude oil produced in the south, Luaybi said.

"Qarmat Ali water plant is not back in the line yet," he said. "It is about to be completed. We hope to start first water injection within first quarter of May."

Qarmat Ali, built in 1970, sustained severe damage and looting immediately after the fall of Baghdad a year ago. The rehabilitation of the Russian-built plant is being carried out by Southern Oil Co. staff with equipment supplied by KBR.

Injecting water into oil formations deep underground helps maintain the pressure that accelerates the oil's movement toward the wellhead. Older fields like South and North Rumaila depend on water injection to keep production economical.

Only 30% of southern Iraq's 27 gas-oil separation stations are working, keeping a lid on the region's output of crude oil, Luaybi said. The rest needs repair.

Before the war, which ousted Saddam Hussein from power, the stations, which separate natural gas from crude oil before it can be exported, processed around 2 million barrels a day of oil.

Power shortages also have taken their toll on production from the south, Luaybi said.

Some 1.65 million barrels a day of output from Iraq's southern fields is exported, with the rest consumed by local refineries and power stations, he said.

Together, the Basra oil terminal, known before as Mina-al-Bakr, and the newly operational Khor al-Amaya have the capacity to export 2.3 million barrels a day, he said. Iraq is exporting only 1.65 million barrels a day from the terminals, however.