Iraq announced a $318 million contract with a unit of Turkish Petroleum to drill 45 wells in the supergiant Rumaila oilfield as the country strives to regain and even surpass pre-war production levels.
With the third-largest proven oil reserves in the world, Iraq said at an industry conference last month that it wants to raise its production capacity to 12 million barrels a day in the next six years from the current 2.5 million, putting it in the same league as Saudi Arabia.
Industry experts have expressed skepticism about this plan, but agree that any progress in that direction would have a significant impact on global oil markets. A big question mark is whether Iraq’s state-owned oil companies are financially able to keep up with their share of the development costs.
Earlier this year, Iraq completed a round of 10 long-term contracts with 15 global oil giants to develop the country’s oil resources. Britain’s BP and China’s China National Petroleum Corp., for instance, signed a 20-year contract to develop the Rumaila field in southern Iraq, which alone has more than 17 billion barrels of crude oil reserves.
The announcement this week concerned an award to TPIC, the foreign exploration and production unit of state-owned Turkish Petroleum. TPIC, along with Halliburton (HAL) and Weatherford International (WFT), is also bidding on a separate contract to drill another 56 wells in Rumaila, according to news agency reports.
Separately, local media reported that Iraq has broken off talks with Nippon Oil (NPOIY.PK) over an $8 billion contract to develop the Nassiriya oilfield, which has some 5 billion barrels in proven reserves.
This field was kept out of the round of international auctions and there was no immediate word about what would happen next to develop the field.
Saudi Arabia already has the capacity to produce in excess of 12 million barrels a day, though current production is considerably lower, at 8 million bpd.
The efforts to ramp up oil production in Iraq are taking place as the country faces elections in March that will demonstrate to foreign investors just how ready the country is to take charge of its future.
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