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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Iraq 's economy faces obstacles to increase its oil production and companies curb ambition

    Rocky
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    Iraq 's economy faces obstacles to increase its oil production and companies curb ambition Empty Iraq 's economy faces obstacles to increase its oil production and companies curb ambition

    Post by Rocky Thu 15 Mar 2018, 2:47 am

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    Iraq 's economy faces obstacles to increase its oil production and companies curb ambition[/size]
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     15 hours ago



    Iraq, OPEC's second largest oil producer, is facing obstacles in the next stage of increasing its production capacity as the appetite of international oil companies to invest in the low-yielding sector in the country is declining.

    After lowering production targets in 2013 and 2014, most foreign oil companies are adjusting their target production levels further, and Iraqi sources and companies say the discussions are proceeding at a slow pace.

    Estimates show that growth has been the hallmark of Iraq's oil production in the last 10 years, an increase of more than 2.5 million barrels per day to peak at 4.71 million bpd in late 2016.

    Iraq owes much of this growth to increases by BP, Exxon Mobil, Lukoil, Eni, Total and Royal Dutch Shell, the companies that oversaw the redevelopment of its fields after the US-led invasion in 2016.

    But these companies have long complained that Baghdad's technical service contracts with foreign companies in the sector are too rigid and offer little return on investment.

    Most companies have negotiated in the last five years to reduce their output target, which led Iraq to reduce its plan to increase production capacity from 12 million barrels per day to nine million barrels per day by 2018.

    Now, this new level seems far-fetched as Iraq aims to increase its capacity to 7 million bpd by 2022.

    "All companies except Petronas and Total are proposing to reduce their target production levels," said Abdul Mahdi al-Amidi, director of contracts and licenses at the Iraqi Oil Ministry.

    "We accept in principle to reduce the level of production targeted to certain fields to lower rates, but all this is under discussion," Amidi told reporters on the sidelines of a conference in Berlin last month.

    Total, along with its partner PetroChina, has pledged to implement Phase III expansion of the Halafaya field, which is estimated at 4.1 billion barrels, with the aim of doubling production to 400,000 barrels per day in 2019.

    Petronas is heading towards production at 230,000 bpd in its Gharraf field.

    "What you see now is a second wave of renegotiation in the light of oil prices and significantly lower budgets than five years ago," said Ian Tom, an analyst at Wood Mackenzie. "There are alternatives in rock oil and deep water for many players in Iraq look better."

    Al-Omaidi said Lukoil was the only one to have reached a preliminary agreement with the Oil Ministry on a reduced level of production target to reach the level of production of its field West Qurna 2 target 800 thousand barrels per day of 1.2 million barrels per day.

    He added that the two sides had not yet completed the talks as the debate continued over whether Lukoil could achieve the new level.

    "We are having discussions but we have not reached an agreement yet."

    He said Iraq wanted to achieve the target production level earlier than Lukoil wanted, but declined to specify the time frame currently under discussion.

    Oil analysts say Iraq's energy is close to five million bpd and could easily be raised to around 10 percent in the next year or two, even without a new agreement on target levels.

    "If the new fields that are currently active are operational, and if the Kirkuk and Bay Hassan fields return, you may see energy from existing investments approaching 5.5 million bpd in the next year or two," Tom said.

    But beyond those investments, as in fields such as Rumaila, West Qurna 1, Halfaya and Zubayr, "you can certainly expect the stability of Iraq's oil production under the influence of the natural decline," he said.


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