Iraq will be a game changer for world oil supply but not any time soon.
Iraq oil ambitions not viable
LONDON // Iraq will be a game changer for world oil supply but not any time soon, energy experts told the Oil and Money conference in the British capital. The panel cast doubt on the agenda set by the Iraqi oil minister Hussein al Shahristani for foreign oil companies to boost production from Iraq's biggest oilfields by huge amounts, raising the country's output capacity almost fivefold to about 12 million barrels per day (bpd) by 2017 from about 2.4 million bpd currently.
"It's easy to throw big numbers out there but these are very challenging production targets," said Sadad al Husseini, the founder and president of Husseini Energy, based in Manama, and a former head of exploration and production for Saudi Aramco. "To reach even 6 million bpd will mean going to smaller fields, tighter reservoirs, enhanced oil recovery. It requires planning and co-ordination. It's a major job."
Mr Husseini criticised Iraq's oil ministry for requiring oil companies to compete for licences on the basis of "plateau" production targets. Excessively high production levels were likely to damage Iraq's oil reservoirs, leading to sharp declines later and reducing their productive life, he said. "This bid for plateau was an error. It is not the way you should go about developing a major field. It was done and now it has to be undone," he told the conference, which ended yesterday. "You need to study the fields and determine the optimum sustainable production in each case." Mr Husseini said he had calculated a "best case scenario" for Iraq of 6.3 million bpd of oil output maintained for 12 to 14 years.
Issam al Chalabi, a former Iraqi oil minister, agreed that the current government target of almost twice that was not sustainable, adding it would be counterproductive to try to achieve it. "I would go for optimisation in a phased manner," he said. "Maximisation [of oil output] is not really rewarding for the country. It will damage the industry. It will damage the reservoirs." Mr al Chalabi also pointed to the vast challenges Iraq faced on issues such as political stability, maintaining security and its lack of infrastructure and export pipelines.
"I will cut my hands off if Iraq can provide 12 million bpd of export facilities," he said. "Yes, Iraq is a game changer but, short-term, definitely not; medium-term, very unlikely; long-term, maybe," he said. Peter Wells, the non-executive director of Neftex Petroleum, a consultancy based in the UK, said it would be impossible for contractors to drill the number of wells required by Iraq's current oil development plan.
He agreed Iraq might realistically be able to raise its oil output to 4 million bpd within five years - a level that would be unlikely to cause waves within OPEC. But he said there was huge potential in the country, adding Iraq was "the last place on the planet where you will find this much oil in such big fields that hasn't been produced. "There is nowhere like Iraq." firstname.lastname@example.org