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Iraq wrestles with water supply dilemma

Iraq’s goal of increasing southern crude oil output could be stymied by a shortage of water—a critical issue for the country as a whole

The modern oil industry needs water. That is an inescapable fact, not just in shale basins where fracking's thirst draws headlines, but in any province where natural reservoir pressure alone is no longer sufficient to keep production levels high.

Iraq is no exception. And it seems slightly ironic that the region once called Mesopotamia-the land between the rivers, girded by the mighty Tigris and Euphrates, once home to the famously lush Hanging Gardens of Babylon-may have to rein in its oil production increase targets due to a shortage of this essential resource.

The head of the Basra Oil Company (BOC), Ihsan Ismail, told a CWC southern Iraq conference in Istanbul in October that the aim was to raise production from the southern fields from around 3.2m barrels a day at present to 5m b/d by 2025. BOC is the government partner to international oil companies (IOCs) operating in the region.

The target looks good on paper. But for the IOCs, such as BP, Eni and Russia's Lukoil to maintain production, let alone expand capacity, they will increasingly need access to water to maintain reservoir pressure-lots of water. The difficulties of ramping up capacity without it are plain. For example, BP's original plateau target for the giant Rumaila oilfield, currently producing just under 1.5m b/d, was 2.85m b/d. That has since been scaled back to 2.1m b/d.

The IOCs have been promised the water since 2013, under a planned Common Seawater Supply Project (CSSP) but has been subject to numerous delays. Until June this year, ExxonMobil and PetroChina were negotiating with the Iraqi authorities to carry out the scheme but talks subsequently broke down. "We are at the final awarding stage for the CSSP. I think that in the first quarter of 2019 the CSSP contract will be signed. I hope," says Ismail, reflecting both optimism but also a degree of caution.

The IOCs also hope that his optimism is justified. The first phase of the project, costing up to $4bn, involves pumping 5m b/d of seawater to the southern oilfields, rising to as much as 7.5m b/d. The initial phase will take around three years, putting the earliest estimate of a completion date in 2022. That leaves little time for the southern operators to ramp up to the 5m b/d 2025 target.

And stimulating oil production is, of course, not the only call on Iraq's constrained water supply, giving the issue a wider economic and social aspect than energy firms simply investing in projects that would give them the supplies they need. "Revenues from water [other than in enhanced oil recovery] do not cover investment costs. It's different from oil," says Wolf Widmann of Austria's ILF Consulting Engineers.

The oil industry must be aware of a role in solving that investment paradox, as developing water supply solutions to meet solely its own needs will provoke, at the very least, sharp criticism from other Iraqi political lobbies.

"You are saying goodbye to agriculture if you take that route," Azzam Alwash, head of non-governmental organisation the Nature Iraq Foundation, told the Istanbul conference in response to the country's deputy construction minister Dera Reshid's proposal to solve the water supply crunch with up to 10 desalination projects built with international investment.

Turkey is currently part of Iraq's problem, with its dams further upstream impacting negatively on Tigris and Euphrates flow. "We must change the dynamics of the dialogue between Iraq and its neighbours. We need commercial co-operation, not political discord," says Alwash, advocating a commercial deal with Turkey for increased supplies-potentially in exchange for oil. In effect, in his solution, Iraq's oil producers would barter volumes for their required water supply and also subsidise Iraq's other water needs, giving the rest of the country a cheaper option than supply from desalination projects seeking a return on capital.

Deputy minister Rashid was unimpressed by Alwash's proposal, on national security grounds. In his view, desalination offers "freedom" and "not [being] tied to Turkey".

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