Iraq: Ambitious Kurds set out growth plans
THE SEMI-autonomous Kurdistan Regional Government (KRG) says it will boost its oil production to 1m barrels a day (b/d) by 2014 and is close to resuming oil exports following an eight-month gap
In addition, it claims new discoveries will significantly increase the country's reserves total.
"We've discovered eight new oil fields, out of which three are world class, and we will be able to boost production to around 1m b/d in three-to-four years," Ashti Hawrami, KRG's natural resources minister, said at a London conference last month. Meanwhile, 100,000 b/d of output is "ready to go", he said - pending a deal with the central Iraqi government in Baghdad over reimbursing companies for their oil costs.
"We believe we have 45bn barrels of oil in Kurdistan, which is oil we didn't believe we had before. This is not part of 115bn of Iraqi oil reserves so often talked about," said Hawrami. He added that the Kurdish north would have pipeline capacity to carry the 1m b/d within 15 months, linking in to the existing Kirkuk-Ceyhan export pipeline.
The minister says the Kurds' focus on private-sector-led projects has given the province a head start over other Iraq regions, where political strife has stalled momentum. "We've awarded contracts to 40 companies from 17 nations," said Hawrami. "Yet we were advised at the outset to auction much larger blocks to get the bigger players in. But we felt that would have meant too little competition. To promote competition we wanted the maximum amount of companies in Kurdistan and that strategy has paid off as you can see from the results."
These companies include Austria's OMV, Korean National Oil Corporation, India's Reliance Petroleum, Channel Islands-based Heritage Oil, Canada's Talisman and the US's Hunt Oil. DNO of Norway and Turkey's Genel Enerji are already producing oil from their Kurdish discoveries.
The KRG has also focused on attracting private-sector downstream investment. "We have already got one refinery working at Erbil, which is producing 40,000 b/d - and this didn't exist two years ago. That's entirely through the private sector. If we had done it as a central-government project, it would still be on paper," said Hawrami. The KRG wants 90,000 b/d of refining capacity on stream by year-end and up to 200,000 b/d within two years. "We are now net exporters of fuel oil and that's been done in the space of just two years," said Hawrami.
Gas is also a big focus in Kurdish Iraq. The authorities claim geological surveys put the region's reserves at around 3©\6 trillion cubic metres (cm). "This places Kurdistan in a position to be one of largest exporters to Europe and means we can meet the gas objectives of our neighbours as well as have a surplus to Europe as reliable partner," said Hawrami.
The UAE-led consortium between Dana Gas and Crescent Petroleum reappraised the Khor Mor gas field in 2008, which it expects to be able to produce 3bn cm/y in later phases.
Hawrami says the Kurdish model should be followed by the central government. "I hope my colleagues in Baghdad will come more frequently to see the success we have had," he said.
Iraq's oil ministry is preparing to offer three gasfields in the next few months with combined in-place resources of 0.7 trillion cm to international bidders. At least 15 companies have been prequalified for the Akkas, Mansuriyah and Siba fields, and the ministry is now considering a third mini licensing round for five oilfields, including the large Nassiriyah and East Baghdad fields.
One area where the Kurds and the central government are united is over the need for a larger Opec quota in future. Iraqi oil minister Hussain Shahristani says that in three years' time, when the country's output reaches 4m b/d, a reassessment of its Opec quota will be necessary.
If 1m b/d of extra Kurdish oil is available within four years, Iraq's demands for a significantly larger slice of the Opec pie will be even stronger, said Hawrami. "After 30 years of isolation and not producing to its potential, allowing the Opec-10 members to take advantage, there would be some justice for us to get an extra quota. And I'm sure that Kurdistan will be part of negotiations on that," said Hawrami.