Business | Oil & Gas
Iraq needs investment of $3b yearly to boost output
Iraqi Oil Minister Hussain Al Shahristani said yesterday his country needed investment of $12 billion to $20 billion to raise its oil production to six million barrels per day (bpd).
- Reuters
- Published: 00:00 June 10, 2006
Istanbul: Iraqi Oil Minister Hussain Al Shahristani said yesterday his country needed investment of $12 billion to $20 billion to raise its oil production to six million barrels per day (bpd).
"Iraq needs $12-$20 billion of investment to raise oil production to six million barrels per day from two million now by 2012, which means $2-$3 billion of investment a year, Al Shahristani told a Turkish-Arab economic conference.
Iraq owns the world's third largest proven oil reserves but the sector has been undermined by war, sanctions, lack of investment and mismanagement.
Some companies may already be taking his message to heart.
The chief executive of Italian energy firm ENI, Paolo Scaroni, said on Thursday the company was considering possible business opportunities in Iraq.
Al Shahristani, who took office last month, said he did not expect world oil prices to fall below the $40-$45 a barrel level by the end of the decade and beyond.
OSPs slashed
Oil rose towards $71 yesterday as Iraq's oil sector continued to look vulnerable despite the death of a top Al Qaida leader. Prices were also also supported as tensions reignited between the West and Iran.
Meanwhile, Iraq has trimmed the official selling price of its Basra Light crude loading in July for customers in the United States, raised prices for Europe and kept levels steady for Asia, industry sources said yesterday.
The State Oil Marketing Organisation (Somo) has set the July price for the grade to Asia at the average of Oman/Dubai quotes minus $2.85 a barrel unchanged from June.
For Europe, the July price was set at dated BFO minus $7.85 a barrel, up 60 cents on June's dated BFO minus $8.45.
The July price to US buyers has been set at a discount of $8.75 to the second month contract of USlight crude benchmark WTI, down 30 cents on May's $8.45 discount.
The death of Iraq's Al Qaida leader Abu Musab Al Zarqawi will help improve Iraq's oil production, particularly in the north, Al Shahristani said.
"The death of Al Zarqawi will lead to the reduction in the level of violence and terrorist attacks and this will definitely help to improve our production, particularly from the northern fields and exports," Shahristani told Reuters in an interview in Istanbul.
In related developments Iraq has dropped two customers from its Basra Light term contract list due to bad performance and shared out the volume to buyers in Asia, an Iraqi oil official said.
"The allocation process is finalised and the customers have been informed," he said. "We will sign the contracts in the next couple days."
He would not disclose which of state oil marketer Somo's 25 lifters had been removed, saying only: "We dropped a couple because of bad performance."
Volumes for the second half of the year would run just under the first half commitment of 1.57 million barrels per day (bpd), he said.
Iraq has relied exclusively on its southern Basra terminal for exports, with shipments from the north on hold due to relentless sabotage since the US-led invasion.
Investor law may be passed this year
Istanbul: Iraqi Oil Minister Hussain Al Shahristani expects a new law on investment to pass through parliament this year, he told Reuters yesterday.
"We have given ourselves two months to draft the law and after that we definitely expect the parliament to pass it this year," he told Reuters on the sidelines of a conference.
Oil multinationals eyeing Iraq's giant largely undeveloped oilfields, are waiting until a new investment code with a legal and regulatory framework is in place, before they venture in.
- Reuters
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