By Dow Jones Business News, September 24, 2013, 10:05:00 AM EDT
DUBAI--Four years after war-scarred Iraq enlisted major oil companies to develop its oil fields, the country is about
to turn up the tap.
Output is set to rise sharply in coming months with help from new oil fields in the south, Hussein al Shahristani, the
Iraqi deputy prime minister for energy, said in Dubai on Tuesday.
The biggest contribution will come from the gigantic Majnoon field, where Royal Dutch Shell PLC (RDSB.LN) last week
began testing production. Output there is expected to rise to almost 200,000 barrels a day before the end of the year,
Mr. Shahristani said at a conference in Dubai.
The Halfaya field in southeastern Iraq should add another 50,000 barrels per day before the end of the year.
"There are increases in other fields, so in total we should add at least 300,000, perhaps more like 400,000 barrels,"
As Iraq is producing about 3.3 million barrels a day at present, that would make about 3.6 million or 3.7 million by
the end of the year, he said.
The best market for the new oil in terms of cost would be Asia, he said, adding that Iraq wants to ship to different
places as insurance against interruptions in trade routes. Iraq is also looking to ship oil through Syria along an
established route once the civil war ends there.
"We hope that as soon as this Syrian situation stabilizes -- the country will have to be rebuilt again -- that Iraq
will use the old route through Syria, implemented through new pipelines, where we will be able to ship Iraqi crude to
the Mediterranean through Syria as well as Jordan," he said.
In 2009, Iraq signed huge contracts with some of the world's largest oil companies to rebuild an industry in disrepair
after a decade of international sanctions and two Gulf wars.
The country is now the second largest exporter after Saudi Arabia in the Organization of the Petroleum Exporting
Countries. Its production surpassed that of Iran partly as a result of the Western sanctions imposed on Tehran for its
Earlier this month, Malaysia'sPetronas Cargali Sdn and Japan Petroleum Exploration Co. (1662.TO) began pumping 35,000
barrels a day from Iraq's Garraf oil field in the south for the first time. Output from the field is expected to reach
230,000 barrels a day in 2017.
Russia's largest oil producer OAO Lukoil Holdings, which is operating the West Qurna-2 field, is also expected to
start first production of 150,000 barrels a day from the field by the end of the year. The southern Halfaya oil field,
which is operated by PetroChina, is producing some 100,000 barrels a day.
Under Iraq's recently formulated Integrated National Energy Strategy, or INES, Mr. Shahristani said the country was
looking to raise production capacity to 9 million barrels a day by the end of 2020.
Iraq should get to about 5 million barrels a day of capacity in the next few years, he said, and the goal envisioned
by the INES was reasonable, although Iraq's actual production "will depend on market demand and how competitive Iraq
The Iraqi government's testy relationship with Kurdistan's regional government remains a sticking point, and could
affect the country's overarching energy development plans, he said. The central government has told Gazprom Neft, Exxon
Mobil and Total to choose between their contracts in the south and those in the northern Kurdistan region.
Exxon has agreed to sell a 25% stake in its project to PetroChina and a 10% stake to Indonesia's Pertamina. It owns a
60% total stake.
Baghdad and the Kurdistan regional government are at loggerheads over who should control the oil wealth in the region.
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