Rumors of Iraqi Target Cutback

The Australian has a news article claiming, based on anonymous sources, that Iraq will soon renegotiate the 12mbd worth of contracts that were issued in two rounds of bidding in 2009.  The goal, according to the article:

Iraqi Oil Production Reaches Post-Invasion High

Iraqi Political Maneuverings

Iraq Oil Report has a very interesting piece on the latest struggles to get a new Iraqi government functioning.  From the global perspective, I think a key question is what happens to the oil ministry:

Government spokesman Ali al-Dabbagh said the leadership of the Oil Ministry, Foreign Ministry and Finance Ministry positions would be split among the biggest blocks, while the other two so-called “sovereign ministries” – Defense and Interior – would be led by independent, non-political people.

Among the sovereign ministries, Oil appears to be the biggest prize, with all three blocks angling for it. The current oil minister, Hussain al-Shahristani, is part of the State of Law coalition.

“Of course we are thinking of the Oil Ministry,” said Kamal Saidi, MP and top ally of Maliki, “But will the political agreement allow this?”

When asked if the Kurdistan Alliance will get the spot, Kurdish President Massoud Barzani said, “It’s not sure yet.”

My sense is that Hussain al-Shahristani has done a remarkably good job as oil minister on behalf of his people in getting all the international oil companies involved in developing Iraq's oil, but in striking some very tough bargains with them, rather than giving away the store.  While nobody is perfect, my impression from thousands of miles away is that he is an unusually competent and honest public servant by Iraqi standards.  I think the odds of a large Iraqi oil production increase will be lower if someone else takes over the position.

So the future direction of global oil production may be hanging in the balance here.

Progress Report on Iraqi Oil Expansion

Back in January, I began to track the al-Shahristani plan, in which the Iraqi oil ministry auctioned off a series of production development agreements for various Iraqi oilfields.  This seemed like it might lead to a very large increase in Iraqi oil production from about 2.5mbd recently, to nearly 12mbd if you just add the target plateaus of all the contracts together:

Demining needed in Iraq, oil giants say

UPI reports today:

MOSCOW, March 29 (UPI) -- Gazprom Neft leads a consortium of investors in Iraq calling on the government to clear mines from the Badra oil field near the Iranian border.

Iraqi authorities report there are more than 27 million pieces of unexploded ordnance in Iraq from the war with Iran in the 1980s. The largest number of mine fields is near Badra in Wasit province.

Gazprom Neft said demining of the region was required to retrieve oil in the border region, Russia's state-run news agency RIA Novosti reports.

Reserves near Badra are estimated at around 2 billion barrels of oil and the project should cost around $2 billion, the report added.

Uncertainty Range for Iraqi Production

Jay Park on al-Shahristani Plan

If you are interested in this whole question of the ramp-up of Iraq's production, don't miss Jay Park's comment on my cross-post at The Oil Drum. According to his LinkedIn profile, Jay Park is Partner, and Chair, Global Resources Practice Group at Macleod Dixon LLP in Calgary.  He has been practicing law in the oil and gas area for three decades.

Here's a couple of excerpts of what he had to say (but read the whole thing and the follow-up discussion at the link above).

Does al-Shahristani Really Think Six Years?

Many people have reacted to Monday's post with disbelief that such an enormous increase in oil production could happen in only six years. I share that scepticism! However, I wanted to document that Dr al-Shahristani really has been saying this. Here's a sampling of news coverage on the point.

Iraq Could Delay Peak Oil a Decade

Historical annual Iraqi oil production, together with linear implementation of Iraqi capacity growth plan announced in 2009. See text for details