WoodMac: Iraq's 2017 Target for Oil Expansion Within Reach
(Bloomberg) -- Iraq’s ambition to boost oil-output capacity to a record 5 million barrels a day is “not unrealistic” as the country prepares for the end of OPEC-mandated supply limits, consultants Wood Mackenzie Ltd. said.
Iraq, which has been rehabilitating its oil industry after years of conflict, has vowed to keep expanding capacity while respecting an Organization of Petroleum Exporting Countries’ accord that will limit its production until next April. The country wants to be ready for either the end of that deal, or to press its OPEC partners for some leeway if the group chooses to further prolong output curbs, Edinburgh-based Wood Mackenzie said.
OPEC’s second-biggest producer reluctantly agreed in November to participate in production cuts to end a global oil glut, arguing it deserved to be exempt while reviving its economy and battling Islamist insurgents. Iraq also hesitated before backing a nine-month extension of the accord finalized on May 25, and has only made about half its pledged output curbs this year, according to the International Energy Agency.
“From a production capacity point of view, the investment in a few of the southern fields is taking them closer to that number,” Ian Thom, principal upstream analyst at Wood Mackenzie, said in an interview. “They may be thinking ahead to the end of the nine-month period, when if they can demonstrate capacity of 5 million barrels, it may make for a different conversation with OPEC members.”
Saudi Arabia, OPEC’s biggest member, has signaled the group is prepared for even longer output curbs if the current measures fail to reduce the world’s bloated fuel inventories.
Output Hurdles
Iraq pumped about 4.6 million barrels a day in December, just before the OPEC-mandated cuts took effect, according to data compiled by Bloomberg. The development of the West Qurna-1, Halfaya and Zubair oilfields could take Iraq “a long way towards that number” of 5 million barrels, Thom said.
Getting beyond the 5 million-barrel level may prove more challenging, according to Wood Mackenzie. A range of obstacles is checking Iraq’s potential, from limited water supply for injection to maintain reservoir pressure to the “very tough” contractual terms that discourage companies from investing, Thom said. While there’s a program to drill 30 wells at the Majnoon field, bottlenecks in oil treatment facilities will hinder growth, he said.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Julian Lee in London at jlee1627@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Dylan Griffiths.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- Libya's Surprise Oil Minister Change Throws Spotlight on Output
- Oil Seals Quarterly Gain in Tightening Market
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea