Iraq S.Oil Co eyes 500,000 bpd output boost by 2012

UPPING PRODUCTION: Iraq's South Oil plans to increase output from fields by up to 500,000 barrels per day within two years. (Getty Images)

The new head of Iraq's state-owned South Oil Company (SOC) said on Wednesday the company plans to boost output from its southern fields by up to 500,000 barrels per day (bpd) within two years.

Fayad al-Nema said the SOC was in talks with foreign firms including Haliburton, Schlumberger, Baker Hughes and Weatherford International to achieve that goal.

"We have submitted an urgent plan to the cabinet through the Oil Ministry to increase production by 350,000-500,000 bpd in two years, through efforts of the SOC and the help of foreign ... firms," Nema told Reuters in an interview on Wednesday.

Weatherford won a $224.4 million contract in May to drill 20 wells in the Bazargan oilfield.

Iraq is desperate to boost flagging oil output after a sharp fall in the price of crude from last year's record highs near $150 a barrel tore holes in the its budget.

Iraq has the world's third-largest oil reserves, on which it relies for almost all its revenue. Its southern oilfields account for more than 80 percent of Iraqi production capacity.

Nema said exports from Iraq's southern Basra terminals were at 1.5 million bpd, up from a previously reported 1.4 million bpd. Basra flows to oil tankers are variable, and often affected by the weather or technical difficulties.

The SOC had recently linked new oil wells to a processor plant in the Nahr bin Omar field, adding 35,000 bpd to production, Nema said, which could also partly explain the rise.

The SOC plans to open an oil production plant - which separates oil from water and gas contaminants - within two weeks to process crude from Iraq's Nassiriya oilfields, adding another 40,000 bpd to overall production.

Nema said the SOC hoped to boost southern production to 2.5 million bpd and exports to 2 million bpd within five years. Southern production stands at 1.77 million bpd, Nema said.

Iraq will at the end of June announce winners of bids by foreign oil firms to develop six of its largest oilfields. It hopes the firms will help it increase national output by at least 1.5 million bpd. It now stands at up to 2.4 million bpd.

Iraq's oil infrastructure is in dire need of a revamp after years of war and sanctions. Political wrangling and a lack of security have hampered efforts to rehabilitate the oil sector.

Nema was appointed SOC chief last month as part of a reshuffle of oil industry officials in a bid to boost output.

"Regrettably, due to the political situation, some unqualified officials were imposed on the sector to run production," he said.

"The security situation caused a delay in raising crude production in all oil companies affiliated to the Oil Ministry." (Reuters)

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