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Iraq eyes increased energy cooperation.

(Category: Iraq Review )

(Image: Baghdad's-Sadr-City.jpg )

IRAQ wants to increase energy cooperation with neighbours Turkey and Iran and plans to expand the Kirkuk-Ceyhan crude oil pipeline and build a parallel natural gas export line to supply both Turkey and the European markets, Iraqi Oil Minister Hussein Al-Shahristani says.

"Interdependence in the energy sector can help regional economic development," Shahristani told an energy conference in the Turkish Mediterranean city of Antalya. "Iraq is ready to do whatever is necessary to enhance relations with its neighbours, especially in the field of energy." Iraq's northern crude export system running from the northern Kirkuk oil fields to the Turkish Mediterranean oil port of Ceyhan consists of two parallel pipelines with a nominal capacity of 1.5 million barrels per day (mbpd). However, the pipeline's capacity was cut after a pumping station was damaged during the 1991 Gulf War. It has been running at a reduced capacity of around 350,000 bpd since the US-led war of 2003 because of erratic oil production from northern fields due to the security situation, which has only recently improved. Shahristani did not give details about the planned gas export line, which has been mooted for some time to carry future gas production from northern and central Iraq through both Turkey and Syria. The Iraqi oil minister also said Iraq planned to rehabilitate an existing but disused crude pipeline to Syria's port of Baniyas and build a gas pipeline to connect eventually with the Arab Gas Pipeline linking Egypt to Jordan, Syria and eventually Turkey. Iraq is hoping to use the Arab Gas Pipeline to export gas from its Akkas field near the Syrian border. Shahristani says a fifth project involved construction of an oil pipeline for the export of Iraqi crude to be processed at Iran's Abadan refinery. Iraq has in recent years relied almost exclusively on its southern oil ports of Basrah and Khor Al-Amaya for the bulk of its crude exports, currently running at around 2.2 mbpd, and wants to diversify its export outlets. Shahristani points out that Iraq's energy trade with its neighbours was currently very small. The value of energy exchanges between Iraq and Turkey totaled $880 million in 2007, mainly accounted for by oil exports along the Kirkuk-Ceyan pipeline. "The potential for greater cooperation is vast," he says. Iraq's current proven oil reserves are estimated at 115 billion barrels, Shahristani said, adding that this estimate was based on work conducted before 1980. Iraqi officials have said the country's reserves could be double that estimate if it was properly explored. "There are 65 exploration blocks boasting more than 400 structures which have still not been investigated," Shahristani says. Iraq is currently engaged in a major bidding round to help develop its discovered but not yet developed oil fields, he said, explaining that one bid round was under way, another was planned for the end of this year with further rounds to be held at short intervals. "Current Iraqi crude production is around 2.5 mbpd," he says. "We aim to increase this to 4.5 mbpd within five years and to 6 mbpd within 10 years." Gas production also is slated for a major increase, with a target production of 50 billion cubic metres/year (bcm/yr) by 2014 and 70 bcm/yr by 2019. The first steps in this ambitious programme are under way, he says, noting the government recently had approved a deal to form a joint venture with Shell to process currently flared associated gas from fields in southern Iraq for use in power generation. Egypt, meanwhile, is to send a delegation of senior oil executives and experts to Iraq to explore the possibility of helping with rehabilitation of Iraqi energy infrastructure and participating in oil exploration, Egyptian Oil Minister Sameh Fahmi says. Fahmi, who has just returned from a visit to Baghdad, said the team would look into participation by Egyptian companies in maintenance of oil wells, refineries, pipelines and platforms as well as new drilling and exploration opportunities, leading Egyptian daily Al-Ahram reported. The Egyptian minister says he had agreed with Iraq's Shahristani to establish a strategic agreement between the two sides for cooperation in all aspects of the oil and gas industry and put in place the necessary protocols for implementing the plans. The delegation will include senior oil ministry officials, executives from the state-owned Egyptian General Petroleum Corporation and the Egyptian Natural Gas Holding Company, as well as oil services and drilling contractors. Both Fahmi and Shahristani made clear in separate statements that the Egyptian companies would have to operate within a bidding process, although both sides welcomed Egypt's desire to be involved in the rehabilitation of Iraq's energy sector.Fahmi's visit to Baghdad as part of a delegation headed by Egyptian Foreign Minister Ahmed Abul Gheit followed a recent announcement by Cairo that it was ready to restore diplomatic relations with Baghdad. Cairo has had no official diplomatic representative in Iraq since the July 2005 abduction and murder by Al-Qaeda of its charge d'affaires in Baghdad. Iraqi Prime Minister Nouri Al-Maliki in April appealed to Sunni Arab states to help restore stability in Iraq by living up to pledges to forgive his country's debts and reopen embassies in Baghdad.

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Publication:Oil & Gas News
Geographic Code:7IRAQ
Date:Nov 30, 2008
Words:894
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