Iraq needs $10 billion to rebuild oil industry: former minister

Iraq needs $10 billion to rebuild oil industry: former minister

Dubai (Platts)--15Jun2006

Iraq will need to invest $10 billion to 2010 to rebuild its oil industry
and lift crude oil production capacity to a targeted 3.5 million b/d from 2.6
million b/d currently with investments to date insufficient to meet that goal,
former Iraqi oil minister Ibrahim Bahr al-Ulum was quoted Thursday as saying.
"These investments are essential if Iraq wants to boost its production
capacity to 3.5 million barrels...and then to six million barrels daily
instead of 2.650 million from the northern and southern oilfields," Bahr
al-Ulum was quoted as saying in an interview with the Dubai-based newspaper
Gulf News.
This equates to an average investment of $2 billion annually, he said,
adding that the funds were needed to rehabilitate existing fields and purchase
related equipment. An additional $5 billion will be needed to develop new
fields and expand storage at export terminals, he said.
Since the end of the US-led war against Iraq in April 2003, 40 oil wells
had been repaired and 10 wells dug in 2005. Another 200 oil wells in the
southern Rumaila oilfield and West Qurna needed urgent maintenance, the former
minister said.
The investments allocated by the Iraqi government, which amounted to $3
billion last year, was not enough to cover all the requirements of the Iraqi
oil sector, which has produced below its pre-war capacity due to the slow pace
of efforts to rehabilitate war-damaged equipment and bring on new production.
Iraqi production is currently running at just over 2 million b/d, far
below the nearly 3 million b/d level reached in months leading up to the war
which ousted Saddam Hussein. The majority of production is from the southern
oilfields with northern production and exports hampered by persistent
insurgent attacks on infrastructure and the pipeline system.
Bahr al-Ulum said that he expected the situation in the north to improve
following the killing last week of al-Qaeda leader in Iraq, Abu Musab
al-Zarqawi, blamed for much of the violence and kidnappings that have kept
foreign companies out of the country.
Iraqi stocks of Kirkuk crude at the Turkish Mediterranean port Ceyhan are
estimated at between 3 to 4 million barrels, traders said Wednesday.
Iraqi exports of Kirkuk through the Turkish port of Ceyhan have been
patchy since the end of the war. Traders said Wednesday that Iraq had resumed
crude flows to Ceyhan at a rate of around 23,000 barrels/hour late on Saturday
in an effort to build storage at the Turkish Mediterranean port, where it
currently has 2 million barrels in storage.
Iraq's State Oil Marketing Organization usually issues a spot tender when
stock levels reach around 3 to 4 million barrels or higher but there has been
no formal confirmation from Baghdad that crude is being pumped into Ceyhan.

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