BAGHDAD – A senior Iraqi official on Wednesday said his country expects to ramp up oil production to 4.5 million barrels per day by the end of next year from around 3.5 million barrels now, thanks to work by a handful of international oil companies developing the country’s prized oil and gas fields.
The chairman of the prime minister’s advisory commission, Thamir Ghadhban, also said that resource-rich Iraq, which sits atop the world’s fourth largest proven reserves of conventional crude, is also aiming to produce 9 million barrels a day by 2020.
Oil revenues make up 95 per cent of the country’s budget.
Ghadhban, a former oil minister, made the comments at a ceremony in Baghdad to lay out a long-term energy plan that sets policies and recommendations to develop infrastructure, satisfy local demand, diversify the economy, create jobs and improve living standards.
The Integrated National Energy Strategy says Iraq needs to see $620 billion invested in its oil and gas and related industries through 2030. It suggests that Iraq could generate about $6 trillion based on an estimated price of about $100 for per barrel of oil.
Benchmark oil prices were trading above $95 a barrel Wednesday.
Iraq has been struggling to develop its oil and gas reserves after years of war, international sanctions and neglect. Foreign companies with the resources and expertise were hesitant to come in after the 2003 U.S.-led invasion due to deteriorated security situation. But since 2008 when security situation started to improve, Iraq has awarded more than a dozen oil and gas deals to international energy companies such as U.S. Exxon Mobil, UK’s BP, France’s Total and others.
Since then, daily oil production increased remarkably from around 2.4 million barrels a day to around 3.4 million barrels a day now and exports from less than 2 million barrels a day to 2.4 million barrels a day now.
Although the plan was approved by the Cabinet in April, it is unclear if the government will be able to implement it.
Baghdad-based analyst and former planning minister Mahdi al-Hafidh said the plan is “very important” for the future of Iraq, but political infighting and instability could hamper it.
“There is no doubt that it is very important to guarantee political stability, to defuse political tension and to enable the government to have real authority all over the country,” al-Hafidh told The Associated Press on the sidelines of the ceremony.
But he said a solution of the country’s current acute crisis must come first. The last months have seen increasing polarization between the Shiite-led government and Sunni Arabs as well as the worst wave of violence in years.
Iraq’s daily production and export could see bigger contribution from the oil-rich, self-ruled northern Kurdish region, but a payment row with the Arab-led government prompted the Kurds to suspend exports through Baghdad-run pipelines.
Also Wednesday, the country’s Deputy Prime Minister for energy Hussain al-Shahristani said there is still no agreement between the two sides to resume oil exports despite a visit by the prime minister to the Kurdish region on Sunday in a bid to improve their strained relations.
The Kurds have unilaterally signed dozens of oil exploration deals with foreign energy companies over the objections of Baghdad, which maintains that they are they illegal. Early this year the Kurds began trucking oil through Turkey to the international market, prompting charges of smuggling and threats of lawsuits from Baghdad.
The rights to develop natural resources are part of a long-running dispute between Arab-led government in Baghdad and the Kurds that also involves territory and the allocation of money.