Recovering Iraqi oil production could go some way towards meeting an expected spike in world oil demand later this year, assuming that security improves and output can be ramped up, a senior Iraqi oil marketing official said on Thursday. Posted on 04/15/2005 11:19:09 PM PDT by M. Espinola
Recovering Iraqi oil production could go some way towards meeting an expected spike in world oil demand later this year, assuming that security improves and output can be ramped up, a senior Iraqi oil marketing official said on Thursday.
But any boost in Iraq's crude production is still likely to fall short of optimistic output estimates of 3.5m barrels a day made in the early days of the US-led administration in Iraq.
"We expect to boost our production by 500,000 to 750,000 b/d [barrels per day], if and only if the security situation improves and if investment plans are put forward in a timely fashion," Dhiaa al-Bakkaa, director general of the State Oil Marketing Organisation (SOMO), told the Financial Times.
Actual production so far in April has been just over 2.1m b/d, of which about 1.5m b/d has been exported, Mr Bakkaa said.
Nevertheless, this increase will help meet the expected increase in global oil demand of more than 2m b/d this year. The bulk of this increase is forecast to be met by members of the Organisation of the Petroleum Exporting Countries, in particular Saudi Arabia.
"We expect it [output] to pick up after June," he said, forecasting improved output from southern oilfields, which account for most of Iraq's production.
Regular sabotage attacks on the pipeline from the northern producing fields in Kirkuk to Turkey's Ceyhan port has kept exports almost idle from the north since the Iraq war two years ago.
Sabotage attacks had fallen since the elections but continued to be well planned and executed, targeting key facilities such as pipeline junctions, which were hard to repair, Mr Bakkaa said.
The Iraqi oil sector suffered decades of under-investment under the former regime of Saddam Hussein, which was subject to international sanctions after the Iraqi invasion of Kuwait in 1990.
Fresh spending in the past two years has largely been aimed at maintaining and repairing infrastructure damaged by sabotage.
Production is up only modestly, if at all, since the start of the year, with the state oil establishment still struggling in the face of well- aimed insurgent attacks.
US officials argue that the insurgency is flagging since the new Iraqi government's election in January. But this view may be premature, given the deadly attacks this week.
During the past two months, potential oil production increases have also been held up by a political impasse in Baghdad, with the two main blocs in Iraq's newly elected national assembly at odds over how to distribute key cabinet posts.
This week the Kurdistan Alliance, the parliament's second biggest bloc, appears to have conceded the contentious oil portfolio to the Shia-dominated United Iraqi Alliance, clearing the last big hurdle in negotiations towards the formation of a new cabinet.
With UIA nominee Ibrahim al-Jaafari now confirmed as prime minister, the cabinet should be named within two weeks.
The choice of Iraq's next oil minister, however, remains a matter of speculation. Current minister Thamer al-Ghadhban, a Shia technocrat, is rarely mentioned as a contender, despite being widely respected in the industry.
Even once the cabinet is in place, however, Iraq's new government will probably need more than a year to address and clarify the legal and regulatory questions about resource ownership required for big foreign oil companies to enter the market.
Iraqi officials hope that, in the meantime, oil-services companies can be enticed to help boost output from existing fields.
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I hope Iraq tells OPEC to stick it and tell them they are going to set their own quotas to rebuild their country.
If people think this will help the U.S. forget it. The U.S. has access to plenty of oil but not the refineries to turn it into gasoline. If you want to see a national emergency just wait until just two of Americas refineries are out of service.
Saddam never had his oil sabotaged because it was understood that families, villages and clans would be killed and made to pay for it.
Sabotage is the largest factor keeping down Iraqi oil output
Many of the reports contained in the linked report are not really covered by the media except in passing.
Iraq Pipeline Watch: Attacks on Iraqi pipelines, oil installations, and oil personnel:
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