Baker Hughes likes oil price at least as high as now

KHOBAR, Saudi Arabia (Reuters) - U.S. oilfield services firm Baker Hughes (BHI.N) needs oil prices at least around current levels of $86 a barrel, a top executive at the firm said on Tuesday.

"We want oil prices to stay at least where they are which means for us doing business and for projects to continue," said Belgacem Chariag, president of Baker Hughes for the Eastern Hemisphere.

U.S. crude futures have rallied to an 18 month high close to $87 a barrel. They have made their steepest 5-day winning streak this year, and broken out of an established range around $70 to $80.

The oilfield service sector has been battered over the past year as oil and gas producers cut spending on new wells amid weak demand.

Chariag said he hoped a recovery in the sector to start in the second half of this year.

"In the fourth quarter it was bad, in the first quarter it was not any better. We do think next year will be much better and we wish recovery to start in the second half," he said on the sidelines of an industry conference on Monday.

SAUDI GAS

Saudi Arabia has been stepping up its search for gas to cater for demand that is growing 7 percent annually, after an oil price rally between 2002 and 2008 encouraged more power and industrial projects.

Chariag said Saudi Arabia has started exploring for tight gas -- gas embedded in rock formations that only now can be accessed.

"Tight gas is a priority, the future is tight gas in Saudi Arabia and we will be part of that."

State oil giant Saudi Aramco has been working on tight gas exploration for the past 20 years, an Aramco executive said last year. But the firm has yet to have the technology that makes its extraction cost effective.

As for Iraq, boosting crude output to as much as 12 million barrels per day (bpd) in coming years is technically feasible, Chariag said.

Iraq, after years of war and sanctions struck development contracts with global oil majors that could also signal a bonanza for international oil service companies.

"Iraq is going to be very interesting, we trust that their ambitious plan is going to be feasible technically," Chariag said. "We are ready whether this happens or not, despite concerns on particularly security and logistics' efficiency."

IHS Cambridge Energy Research Associates said in a report last week Iraq's ambitious plans are unlikely to be fully realized given political, security, operational and infrastructure challenges.

Oil major BP Plc (BP.L) along with its Chinese partner CNPC and Iraq's South Oil Co awarded last month nearly $500 million worth of new drilling contracts for Rumaila giant oilfield.

Baker Hughes did not win any of those deals, but was awarded an Electrical Submersible Pumps (ESP) contract in Rumaila from the three oil firms, he said.

Rumaila, with 17 billion barrels in estimated crude reserves, is the workhorse of Iraq's oil industry, producing almost half its total output of 2.5 million barrels per day.

(Editing by William Hardy)