According to IHS CERA senior director Bhushan Bahree, OPEC might well find its quotas being squeezed once Iraq begins producing its potential.

During CERA Week in Houston in March 2010, Bahree discussed Iraq’s enormous potential, noting that of all of the OPEC countries, Iraq has been a “laggard,” but that there is no geological reason for that. The country’s outlook for production capacity is about 11 to 12 MMbbl/d in six to seven years. Bahree’s prediction is that Iraq will be producing 6 MMbbl/d by 2020 and 8 MMbbl/d by 2025.

Iraq awarded leases in 2009 that could account for nearly 10 MMbbl/d in incremental capacity. Of course, the fact that the reserves are in the ground does not mean getting them into production will be easy.

According to Jim Burkhard, managing director of IHS CERA’s global oil group, Iraq will be a huge player over the next decade, but operators will have their work cut out for them.

Burkhard told attendees of the Microsoft Global Energy Forum in Houston on January 21, 2010, that Iraq’s reserves could change the world balance, explaining that between 1998 and 2009, “The entire world saw oil production increase by 10 MMbbl/d.” Now, he said, “One country has the potential to increase global oil supply by the same amount.”

A Wall Street Journal report on the most recent licensing round says supermajors, including Royal Dutch Shell, France’s Total SA, and Chevron Corp., are among the companies interested in Iraq acreage.

Iraq reportedly will invite 15 companies to bid to develop three gas fields before the end of 2010, and Shell and Total again are expected to be among the bidders.

In February, His Excellency Samir Sumaida’ie, Ambassador of Iraq to the US, talked to potential investors about business opportunities in the country. Speaking to a Houston audience via video from Washington, DC, he outlined a number of emerging prospects.

“The Iraqi budget is entirely dominated by oil revenue,” Sumaida’ie said. “As we increase our oil production – this is planned, hopefully in five years’ time – we hope to at least double what we produce now. The excess in revenue will primarily go into investment, building the infrastructure.”

According to Sumaida’ie, this introduces enormous opportunity, with many projects that will develop oil fields and increase production. To carry out these plans, the country needs to build export facilities in the Persian Gulf to enable the additional oil to be loaded onto tankers. There has to be additional infrastructure.

“We need to build pipelines to take the oil from the field to the terminal,” Sumaida’ie said.

Spotlight, Iraq, British Ambassador

British Ambassador John Jenkins (left) and Maj. Gen. Vincent K. Brooks, commander of US Division-South, listen to a BP foreman explain the workings of an oil rig that has been erected atop the Rumaila oil field in Basra Province, Iraq. (US Army photo by Master Sgt. David Bennett)

Potential investors
A delegation of British, Dutch, Italian, and Japanese diplomats arrived in Basra, Iraq, on May 25, 2010, to promote international interest in helping Iraq develop its oil industry.

The group, including US Ambassador Christopher Hill; British Ambassador John Jenkins; Dutch Charge D’Affaires Lars Tummers; Italian Ambassador Maurizio Melani; Japanese Charge D’Affaires Katsuhiko Takahashi; and Maj. Gen. Vincent K. Brooks, commander of US Division-South; conducted a walking tour of an oil rig to see firsthand how the oil industry is applying modern technologies to accelerate efforts to expand production.

Weatherford Drilling International’s rig 841 is one of few structures in this part of Basra Province, which is home to the 17 Bbbl Rumaila oil field, the largest in the country.

The field, 20 miles (32 km) from the Kuwaiti border, is being developed by BP. Plans are in place for BP, in concert with Chinese oil producer and supplier CNPC, to develop the field. Ownership of Rumaila remains with Iraq.

Rumaila is producing 960,000 b/d, nearly half of Iraq’s current output. Estimates show the field’s production will increase to almost 3 MMbbl/d within six years. With only eight wells operating now, experts such as Randal Coffman, operations superintendent for Weatherford 841, venture that once oil production ramps up, its far-reaching resources will push Iraq into the top echelon of oil-producing countries in the world.

At the time of the visit in May, Weatherford was preparing to begin drilling onsite within the next couple of weeks. The operation was temporarily halted so the ambassadors and other officials could explore the worksite.

After inspecting the site, Melani said the sizable wealth that rests underground holds much promise for Iraq’s future. “Essentially, with the level of oil profits, this is a good opportunity to develop [Iraq’s] economy and invest in other sectors,” he said.