Iraq sees oil output at 3 million bpd by year-end

RUMAILA, Iraq Sat Jun 4, 2011 1:08pm EDT

RUMAILA, Iraq (Reuters) - Iraq expects its oil output to rise to 3 million barrels per day by the end of this year and sees it growing an additional 500,000 to 1 million bpd next year, Deputy Prime Minister Hussain al-Shahristani said on Saturday.

Shahristani said Iraq's programme to install new single point moorings or SPMs would help increase export capacity by an additional 1.8 million bpd by the end of this year.

The OPEC member's current output is about 2.7 million to 2.8 million bpd. Iraq's oil exports in May averaged 2.225 million bpd.

"Export terminals and pipelines will not be the obstacle," Shahristani, who is responsible for Iraq's energy affairs, told reporters during a visit to southern oilfields and export facilities.

Iraq is rebuilding its oil infrastructure after years of conflict and has signed deals with oil majors to reach a proposed production capacity of 12 million bpd by 2017. Most analysts see 6-7 million bpd as more realistic.

Shahristani seemed eager to fend off speculation about Iraq's ability to reach this ambitious oil development target, and to give assurances that work was going as planned.

He said he was satisfied with the pace of development at the country's giant Rumaila oilfield and added output there should reach 1.4 million to 1.5 million bpd by the end of this year.

He put current output from the field at about 1.250 million bpd.

Rumaila, developed by BP and China's CNPC, produces almost half of the country's crude output.

Output from another southern field, West Qurna Phase One, which is being developed by ExxonMobill and Royal Dutch Shell, was expected to reach 400,000 barrels per day by the end of this year, from current production of around 350,000 bpd, Shahristani told Reuters

"Generally, work in the field is moving well," he said after a briefing with officials from Exxon and Iraq's state South Oil Co. (SOC) at West Qurna Phase One oilfield.

CONCERN OVER CONTRACT DELAYS

At the briefing, Shahristani heard about complaints by Exxon and other international oil companies over excessive red tape in Iraq delaying contracts for work in the fields.

Shahristani instructed SOC to prepare a report to be presented via the oil ministry to the Iraqi cabinet, which had the power to speed up contract procedures. "The cabinet has the authority to grant exceptions," he told Iraqi officials.

The deputy prime minister said oil officials had taken measures to lessen the huge amount of flared gas from Rumaila and were installing plants to generate power using the flared gas. He did not give further details.

At West Qurna Phase One, Shahristani said a multibillion-dollar water injection project led by Exxon aimed at boosting crude output rates in southern oilfields was now moving ahead after some initial bureaucratic obstacles.

"It is divided into stages and now work is in the first stage, to enhance reservoirs and boost production," he said.

Shahristani added a $12 billion gas deal with Shell was "in its final stages now." This referred to a long-delayed joint venture between Iraq's South Gas Co., Shell and Mitsubishi to capture associated gas at southern fields.

The deputy prime minister earlier told Reuters Iraq supported an increase in OPEC production if a hike were needed to meet rising global demand. OPEC oil ministers meet on June 8 in Vienna to decide output policy.

"Iraq supports an increase in production if there are studies indicating a rise in global demand for crude," he said.

South Oil Co. chief Dhiyaa Jaffar told Reuters current output from the small Tuba oilfield was around 23,000 bpd, and this was expected to rise to 50,000 bpd at the end of the year.

He was speaking at a crude processing plant at the field, which is being developed by the state-run company as part of Iraq's own efforts to boost production from fields not being developed by foreign oil companies.

(Writing by Patrick Markey in Baghdad; Editing by Pascal Fletcher and James Jukwey)

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