IRAQ - Part 2 - The Oil & Gas Fields.

Iraq is the only country in the world with many big oil and gas fields discovered and still awaiting development. Only 15 fields have been developed out of 73 discovered. The country's oil production capacity now is 2.6 million b/d.

The current capacity, however, is not sustainable because of water incursions and reservoir problems. Unless advanced equipment and spare parts are imported for extensive repair work at some oilfields, production would fall (see fields' profiles in Downstream & Gas Market Trends).

France, Russia and China are lobbying for the UN Security Council to lift the oil embargo on Iraq, so that foreign companies provide equipment and spare parts necessary to solve problems at declining oilfields as well as begin developing other fields. The US is blocking this, but agrees to a lifting of the $5.256 bn half-yearly ceiling on Iraqi oil sales.

On March 30, 1999 a four-member UN panel on environmental aid to Iraq said in a report that Baghdad should be allowed to have both its oil production and export capacities expanded at a rapid pace to avert a human disaster. It said Iraq must export as much as it can, not only oil but other products, such as fertilisers, sulphur, dates, nuts, etc. It recommended that foreign firms should be allowed to invest in developing Iraq's oil production and export capacities and in its agricultural sector. (This is one of three panels formed by the UN Security Council to find a basis for its Iraq policies. The humanitarian panel said in its report Iraq had slipped from "relative affluence to massive poverty". The second panel is on missing Kuwaitis and property looted by Iraqis during their occupation of Kuwait from August 1990 to late February 1991. The third panel is on weapons and says intrusive UN inspections in Iraq should be resumed).

Baghdad intends to expand the country's production capacity to more than 6.35m b/d in the long run. On offer for foreign companies to develop under production sharing agreements (PSAs) or service contracts (SCs) are 11 new oilfields having the potential to produce 3m b/d in the south and 11 others in the north with a potential to produce about 450,000 b/d. Also on offer are three oilfields in the central region with a potential to produce 300,000 b/d. Additional production of almost 1m b/d can be made under SCs from partially developed reservoirs in producing oilfields. Hence, more than 4.7m b/d is the potential of 33 fields, which exceeds the required additions to reach a target of more than 6.35m b/d.

Also on offer to foreign companies are nine blocks for exploration in the western desert. The geological prospects in Iraq are excellent, in some areas unique in the world (see Gas Market Trends No. 17).