BAGHDAD: Big Oil is poised to spend over $25bn next year to boost output from Iraq’s giant oilfields towards record rates, Iraq’s deputy prime minister for energy said, even as Baghdad struggles to control spillover from the civil war in Syria.
Far from harm’s way, the prized oilfields of southern Iraq — drivers of the country’s oil expansion — are expected to pump an extra 500,000 barrels per day (b/d) in 2014, said Hussain Al Shahristani. Total output this year is set to average just over 3m b/d, holding Iraq’s rank as Opec’s no. 2 producer.
But Baghdad is raising its guard at the smaller fields of Najmah and Qayara — operated by Angolan Sonangol, which lie in the Al Qaeda heartland of Nineveh province in the northwest and at the Akkas gasfield, operated by South Korea’s Kogas, in the western Anbar province near the Syrian border, he said.
“We are definitely concerned about the upsurge in violence, but our concern is for the Iraqi people throughout the country. Iraq is trying its best to combat terrorism,” he said in an interview in his office in the heavily fortified green zone.
“The security situation has not affected the oilfields in the south and central Iraq and we haven’t noticed any hesitation or slow down in investment by the companies.”
Oil titans BP, ExxonMobil, Royal Dutch Shell and Eni have been at work in the south of the country at Rumaila, West Qurna-1 and Zubair since 2010 when they signed a series of service contracts with Baghdad.
After stagnating for decades due to sanctions and wars, their overall investment of around $30bn — from 2010 through 2013 — has ramped up these fields by 600,000 b/d. Shahristani said he did not expect militants to inflict any lasting damage on Iraq’s strategic oil network, which has helped generate nearly $60bn this year.
“Quite frankly, I’m not concerned about the impact of terrorist activities on our plans for oil production or power generation. We are going to go ahead,” he said. “These terrorist activities normally aim at soft spots where there are unarmed civilians — market places, mosques and schools.”
Senior oil executives said they remained committed to the country that holds the world’s fifth biggest oil reserves, but are taking no risks when it comes to personal safety. “The security situation is not affecting our investment decisions,” said an oil company source. “Iraq has such huge and easy to access resources: one way or another, the foreign oil companies will find a way to make money.”
Iraq is now suffering bombings on a scale not seen since the bloody chaos of 2006-08. . And that’s impacted oil and gas operations in Iraq’s neighbouring provinces. In Nineveh — where Baghdad’s own oil installations and vital pipeline to Turkey come under frequent attack — Iraqi forces are stepping up patrols of Sonangol’s projects.
Undeterred by the bloodshed in Anbar, Kogas has signed contracts for surface installations and invested hundreds of millions of dollars in pipelines.
Here, too, security is being tightened at the project, which is experiencing minor delays. “We have sent extra forces to the area, specifically to protect their operations,” said Shahristani. A Kogas spokesman confirmed the company was working as normal.
Reuters
