IRAQ To Quadruple Export Capability

Iraq has recently concluded numerous deals with various oil companies to explore and develop fields all around Iraq. There are also deals to overhaul Iraq's existing fields, which have fallen into a serious state of disrepair both before and during the war. It is amazing that Iraq can produce 1.9 mbpd today given the hundreds of bombings and sabotage events since the war ended. The pipelines and pumping stations are frequent targets.

Iraq has signed deals with (BP) and China's CNPC (PTR) to develop the super-giant Rumaila field. The field currently produces 1.05 mbpd.

Exxon Mobil (XOM) has signed a deal to develop the West Quma Phase One field. Spain's (ENI) has agreed to develop the Zubair field.

The Rumaila, Zubair and Quma deals should increase Iraq's output to about 7 mbpd 5-7 years from now.

Another round of bidding to develop 10 largly undeveloped Iraqi oilfields is scheduled for Dec 11-12th. All of these deals must be approved by the Iraqi Cabinet with approval sometime in 2010.

Three pipelines currently carry oil to the Amaya and Basra terminals. However, after years of rust, deterioration, sabotage and minimal repairs they can no longer handle the pressure of higher capacity flows. The new pipelines are being built to take the strain off the existing pipelines and to allow for the greater production volume once the major oil companies get into full operation. It could take 3-5 years before any material increase in production occurs. Nearly everything currently in operation will have to be replaced or brought up to current levels before actual production drilling can begin.

Foster Wheeler (FWLT) and Britains Maritime and Underwater Security Consultants (MUSC) are providing advice, clearing the seabed and conducting site surveys to help Iraq prepare for the pipeline and terminal projects. Moving sunken ships and unexploded ordinance is not a quick task but it is expected to be completed in early 2010.