Monday, March 29, 2010

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.

Sounds like a bit of a risk to that project hitting plateau on schedule.  Of course, it's one of the smaller ones, comprising less than 2% of the overall expansion plan.

In other Iraq oil news, Dr al-Shahristani has been scaring big oil firms with talk of early adherence to an OPEC quota:
After Baghdad signed contracts to add around 10 million barrels per day (bpd) to its oil supply, tough talks were expected within the Organization of Petroleum Exporting Countries on an eventual output target for Iraq.

But Iraqi Oil Minister Hussain al-Shahristani seems to have jumped straight to the end game before even sitting down at the negotiating table with his fellow ministers.

In Vienna for an OPEC meeting last week, Shahristani said Baghdad would participate in OPEC agreements to curb oil supply when output reached 4 million bpd, some 8 million bpd short of Iraq’s envisaged target.

An OPEC quota for Iraq of around 4 million bpd would prove more supportive for oil prices in the medium term than was the prospect of the country remaining outside the system as it expanded supplies to near 12 million bpd.
Oil executives said the prospect of an OPEC quota for Iraq early into that expansion raised big questions over the contracts.

“Either he doesn’t believe in the contracts he’s signed, or he’s saying it’s not his problem,” said an executive at an oil firm which recently signed a deal to work on Iraq’s fields.

“But it is his problem, because it is Iraq’s problem. They still have to pay for all this capacity.”
but of course:
Shahristani may soon be in no position to bargain for Iraq. He may be replaced when a new government is formed after Iraqi elections earlier this month.
For the rest of my Iraq oil blogging, see here.

1 comment:

Greg said...

To me the other news is more significant, Stuart.

If al-Shahristani stays, the Iraqi production surge is likely to be severely curtailed; if he goes, it'll be curtailed by the Oil ministry reverting to its former levels of competence and freedom from political interference.

These "above ground factors" have always been the main cause for scepticism about al-Shahristani's plan.