BAGHDAD (Reuters) - Iraq raised its proven oil reserves figure by a quarter on Monday in a bid to match the clout of leading producer Saudi Arabia and strengthen its case for OPEC to grant it a higher output quota.
New estimates at West Qurna and Zubair fields helped push the figure to 143 billion barrels. That would allow Iraq to surpass Iran to become the world’s No.3 reserves holder after Saudi Arabia and Venezuela, according to BP data.
Some analysts said they were skeptical about the massive revision and were not expecting OPEC to deal with the Iraqi quota until Baghdad manages to raise production and exports.
“The oil reserve is for 66 discovered oilfields in Iraq, and there are many others that have not been discovered yet,” Oil Minister Hussain al-Shahristani said. “It is expected this figure will be increased when these oilfields are discovered.”
He said West Qurna was now the world’s second-largest field and added that the return of global oil firms to Iraq has help boost oil reserves. The oil ministry said Iraq’s “unrecoverable” reserves — were 505.4 billion barrels, most likely referring to probably reserves.
“The new proved reserves figure will entrench Iraq’s position at OPEC and in the future help Iraq to get a higher export quota in OPEC,” Falah al-Amri, Iraq’s OPEC delegate, said.
Shahristani said Iraq’s partners in the Organization of the Petroleum Exporting Countries would need to come up with a new mechanism to determine production quotas for OPEC members but the issue was not being discussed.
“We will not discuss the Iraqi quotas issue with OPEC now. This case has been delayed,” Shahristani said.
Simon Wardell from the IHS Global Insight thinktank told Reuters Insider television that boosting production would take a long time.
“The country needs a massive upgrade in its infrastructure, which is going to take a very long time, regardless of how well the country is functioning politically,” he said.
Iraq’s reserves revision may revive debate about how much oil the world has left. Companies have made numerous attempts to misreport reserves in the past, and analysts are skeptical about the reliability of Middle East reserves data in general.
“I don’t think it’s possible accurately and confidently to look at the reserves for many Middle Eastern countries with a great deal of confidence,” said Paul Harris, a natural resource analyst at Bank of Ireland, referring to numerous previous substantial revisions to reserves by OPEC members.
Some countries, including some OPEC members, are in fact reporting total oil reserves discovered instead of oil still to be extracted, several analysts have said.
But Shahristani said the old figure of 115 billion barrels was actually 110 billion because 5 billion had been consumed.
Most global oil companies have been moving ahead with a series of deals to unlock vast Iraqi reserves, which officials say could boost capacity to Saudi Arabia’s levels of 12 million barrels per day from 2.5 million bpd now.
“It (new reserves figure) is not shattering in any kind of way, but it shows that there is very big upside potential,” said Samuel Ciszuk, senior Middle East energy analyst at IHS energy.
Bassam Fattouh from the Oxford Institute for Energy Studies agreed that Iraq’s potential was huge but added he doubted the country would be able to rival Saudi production levels and therefore OPEC would not rush to set a quota for Iraq.
“I expect OPEC to continue having a wait-and-see approach and deal with this when Iraqi output and exports actually start increasing,” he said.
Iraq relies on oil for about 95 percent of its budget. The oil deals could provide it with the billions of dollars it needs to rebuild after years of war, sanctions and decline.
Decades have passed with very little oil exploration activity in Iraq, and reserves data has not been revised for years. The oil ministry says it has been carrying out 3D seismic surveys to update its oil reserves data.
“There are expectations for all the mega fields to actually hold much more crude than previously has been formally recognized, just because Iraq hasn’t had any opportunity and possibilities to survey them properly with modern advanced technology for decades,” Ciszuk said.
Additional reporting by Aseel Kami; Editing by Jim Loney, Dmitry Zhdannikov and Jane Baird