Newsdesk, September 7,
--International oil companies including Shell, ExxonMobil, Total, BP
and Chevron are positioning themselves to exploit Iraq's rich
oilfield potential once the country agrees to legislation protecting
their investments.
The attraction lies in more than 500 geological structures believed
to contain huge volumes of oil and. Most structures have yet to be
drilled and at present almost all Iraq's oil is produced from just
20 fields.
The majors could commit $20 billion into rebuilding and developing
Iraqi oil and gas fields but moves so far have been delayed by the
deteriorating security situation as well as a lack of definitive
legal guidelines for foreign investment.
US Energy Secretary Samuel Bodman pressed for a clear legal
framework during a July visit to Baghdad declaring it would be
instrumental in attracting foreign investment to Iraq's oil sector.
Raising output
The government has said it aims to produce 3.5 million b/d of oil by
the end of next year and 4 million b/d by the end of 2008 and up to
8 million b/d by the end of 2010. The targets are considered by
outsiders impossible to achieve without multi-billion dollar
investment from international oil companies.
Most companies have already identified areas of the country
particularly in the southern provinces where they would like to
explore. France's Total is looking at Majnoon and Bin Umar, Spain's
Repsol at Nasiriyah and Shell at Ratawi.
Prime Minister Nouri al-Maliki's oil advisor Thamer al-Ghadhban says
negotiations could take up to a year to conclude once rules of
investment are established but he suggests talks should run
alongside parliament's discussions about legislation.
A complicating factor is the question of regional power with
politicians split according to religious and ethnic loyalties.
Kurds, for example, have been used to a large measure of autonomy
even during Saddam's time. The constitution is still vague on
whether the country's mineral wealth is controlled by central
government or by the regions in which it is located.
Autonomy push
Kurdish leaders are pressing for their autonomy to be enshrined in
the country's laws. However, this could set a marker for others also
seeking much looser ties with central government in parts of the
country which contain some of Iraq's richest oilfields.
The legal situation has not prevented three smaller European oil
companies starting wildcat exploration in Iraq's less troubled
Kurdish region. The three are Canada's Heritage Oil, the UK's
Sterling Energy and Norway's DNO with the latter already making a
commercial discovery at Tawke in the Zakho region close to the
Turkish border.
Reports suggest that the field could contain a reservoir of 100
million barrels. Plans are going ahead for production of up 20,000
b/d to start in 2007 rising to a potential 200,000 b/d.
Officials say the northern region has proven reserves of 3.6 billion
barrels and possibly as high as 45 billion barrels. Such attractive
statistics may also lure larger international oil companies to the
region if Iraq's promised hydrocarbon law is not passed as promised
by the end of 2006.
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