Iraq
Iraq contains 112 billion barrels of proven oil reserves, along with roughly 215 billion barrels of probable and possible resources. Iraq's oil resources are the world's second largest, exceeded only by Saudi Arabia's. Iraq's proven oil reserves are located in 73 structures, including at least 6 super-giant, 17 giant, and 20 large fields. Only 15 of these 73 structures have been developed, and currently producing fields contain about 40% of total proven reserves. Iraq's true resource potential may be understated, as recent advances in horizontal/multilateral drilling and enhanced oil recovery likely will increase recovery rates and raise total recoverable reserves. In addition, most of the exploration and production activity to date in Iraq has occurred at the Cretaceous level. Deeper oil-bearing formations at the Jurassic and Triassic and Paleozoic levels (mainly in the Western Desert) could yield additional resources, but have not been explored.
Iraqi oil reserves vary widely in quality, with API gravities in the 24o to 42o range. Iraq's main export crude come from the country's two largest active fields: Rumaila and Kirkuk. The southern Rumaila field produces three streams: Basra Regular (34o API, 2.1% sulfur); Basra Medium (30o API, 2.6% sulfur); and Basra Heavy (22o-24o API, 3.4% sulfur). The northern Kirkuk field produces 37o API, 2% sulfur crude. An additional export crude, known as "Fao Blend," is heavier and more sour, with a 27o API and 2.9% sulfur. Following post-U.N. sanction development of South Rumaila's Yamama formation, Iraq plans to export up to 800,000 bbl/d of "Basra Light" (35o-40o API). There is evidence, however, that capacity expansion at the main Kirkuk and Basra fields could be limited by the presence of water in the reservoirs, and the consequent need for de-emulsifying chemicals and other dewatering equipment. Also, the Basra fields may require expensive enhanced oil recovery (EOR) techniques and other infrastructure repairs.
Production
By July 1990, Iraqi crude oil output had reached 3.5 MMBD, with production capacity at 4.5 MMBD -- the highest levels since 1979. Through the first 8 months of 1998, Iraqi crude oil production was averaging 2 MMBD, up from 1.2 MMBD in 1997 (in October 1998, production reached approximately 2.4 MMBD). About 550,000-600,000 bbl/d of Iraq's oil output is consumed domestically, either for refining or for direct burning by industrial customers or utilities. Another 90,000-100,000 bbl/d is delivered to Jordan via truck.
Iraq needs a rapid infusion of critical oil production equipment, including de-emulsifying chemicals and chlorine, in order to achieve (and sustain) its ambitious target of increasing oil production from early September levels by 150,000 bbl/d, to as high as 2.7 MMBD (Iraq already had increased production by 200,000 bbl/d in August from July levels). As of September 1998, around 1.5 MMBD of Iraqi production appeared to be coming from southern fields (mainly North and South Rumaila) , with an additional 1 MMBD from northern fields. Iraq's battle with "water cut" reportedly was impeding progress, especially in the south.
Exports
Iraq's southern oil production capacity falling from 2.25 million bbl/d to 75,000 bbl/d in mid-1991. The largest producing oil field in this region is Rumaila. The production facilities including a storage capacity of 1.6-MMBD and export through Mina al-Bakr terminal, as well as pumping stations along the 1.4-MMBD Iraqi Strategic Pipeline. Southern Oil Capacity has 7 other sizable fields, which remain partially mothballed. These include Zubair, Luhais, Subba, Buzurgan, Abu Ghirab, and Fauqi.
Oil Field Opportunities
The Kirkuk
field, originally brought online by IPC in 1934, still forms the basis
for northern Iraqi oil production. Kirkuk has
over 10 billion barrels of remaining proven oil reserves. The Jambur,
Bai Hassan, and
Khabaz fields are
the only other currently- producing oil fields in northern Iraq. Production
capacity in northern and central Iraq was estimated at between 0.7-1 MMBD,
down from around 1.2 MMBD before the Gulf War.
This centrally located field currently produces 50,000 bbl/d of heavy, 23o API oil as well as 30 million cubic feet per day (Mmcf/d) of associated natural gas. Iraq hopes to add additional facilities to boost output to over 150,000 bbl/d. Ajeel field contains 3 billion barrels of oil and 5 trillion cubic feet (Tcf) of associated gas. Iraq is seeking foreign assistance for a second-phase Ajeel development, which would raise oil production capacity from 25,000 bbl/d at present to 50,000 bbl/d, as well as 300 Mmcf/d of gas.
The planed production target for the Ministry of Oil, to reach 3 MMBD of production capacity could be reached within 1 year, 3.5 MMBD within 3-5 years, and 6 MMBD in less than a decade after the lifting of U.N. sanctions. This would be accomplished by a 3-phased development effort including:
Development Programs
- Re-working and upgrading existing upstream and downstream facilities;
- Attracting foreign investment for new field development and production;
- Actively conducting exploration and development activities in prospective areas such as the Western Desert.
Field development work under the three phases would be extensive, with 33 fields containing 50 billion barrels of reserves and a potential production capability of 4.65 MMBD slated for eventual development.
Of these 33 fields, twenty-five have been appraised, but never developed. Of the 25 appraised fields, eleven are located in southern Iraq and have an output potential of 3 MMBD.
Smaller, undeveloped fields are located in northern and central Iraq and have estimated output capabilities of 450,000 bbl/d and 300,000 bbl/d, respectively. A further eight of the 33 fields are already in production, but will require more work to tap additional reservoirs and to bring another 900,000 bbl/d of production online.
Although development costs in Iraq are as low as $1/barrel, there is no doubt that any post-sanction oil program will require massive amounts of foreign investment. It is estimated that Iraq would need at least $5 billion of foreign investment during the first 2-3 post-sanction years in order to bring the country's oil output back to pre-Gulf War levels. It is also projected that $30-$50 billion of foreign investment would be required to bring capacity up to 6 MMBD.
Dozens of foreign oil companies from a wide variety of countries were reportedly in discussions with the Iraqi government. Iraq plans to offer new fields to foreign oil companies through production sharing contracts (PSC), joint ventures, and service contracts. Initially, Iraq plans to offer up to 25 new fields to foreign companies. Ten of these fields, with a production potential of 2.7 MMBD, are slated for development under PSCs with foreign companies. Four of these fields are located in southern Iraq and, with a combined production potential of 2.1 MMBD, represent the cornerstone of Iraq's post-sanction development plans. These four "giant" southern fields are Majnoon, West Qurna, Nahr Umr, and Halfaya.
Recent Deals
One recently reported deal is with the China National Petroleum Corporation (CNPC) for development of the Ahdeb field. Ahdeb is located about 40 miles south of al-Kut in central Iraq. The field contains an estimated 1.4 billion barrels of oil and has a production potential of roughly 90,000 bbl/d. Development and operating costs are expected to be around $1.3 billion. U.N. sanctions have, to date, apparently limited development to mainly surveying, work on Ahdeb.
Russia has a $3.5 billion, 23-year deal with Iraq to rehabilitate Iraqi oilfields, particularly the 15-billion-barrel West Qurna field (located west of Basra near the Rumaila field). Production is to begin only once U.N. sanctions are lifted. It is planned to install equipment with capacity to produce 100,000 bbl/d from West Qurna's Mishrif formation by March 2000. Overall, the West Qurna PSC is to include development of the Yamama and Mishrif reservoirs, which, combined, contain 7-8 billion barrels of light (37o API) and heavy (27o API) crude oil, respectively. West Qurna has estimated production potential of 500,000-750,000 bbl/d, two-thirds of which will be heavier Mishrif crude. At present, most of the required production wells have been drilled, although a crude pipeline spur and associated gas processing stations are only partially completed. Completion of first phase development could take up to a year, which is valued at $3.7 billion.
Besides West Qurna, PSCs for the three other large southern oil fields are in various stages of negotiation. The largest of the four fields is Majnoon, which has reserves of 10-30 billion barrels of 28o-42o API oil. Located only 30 miles north of Basra on the Iranian border, Majnoon originally was discovered and partially appraised by Braspetro in the late 1970s. Prior to the outbreak of the Iran-Iraq War, 24 wells had been drilled to assess the field's 14 oil-bearing zones. Since that time, Iraq has conducted limited reservoir and design studies.
As of October 1998, French companies were negotiating with Iraq on development rights for Majnoon. In the past, it was reported that the companies would retain operator ship and a 40% stake in the $3-$4 billion project. Initial output at Majnoon is expected to be 300,000 bbl/d, with later development yielding 600,000 bbl/d or more. Ultimate production potential is estimated at up to 2 MMBD.
As with Majnoon, the 6-billion barrel Nahr Umr field was explored by BPC and later appraised by Braspetro in the mid- to late 1970s. Prior to the Iran-Iraq War, 13 wells had been drilled. The development of Nahr Umr will have an initial output is expected to be around 440,000 bbl/d of 42o API crude, but may reach 500,000 bbl/d with more extensive development.
The 5-billion barrel Halfaya project is the final large field development in southern Iraq. Italian Agip originally drilled 5 appraisal wells at Halfaya under a service contract in the 1970s. A variety of companies reportedly have shown interest in the field, which could ultimately yield 200,000-300,000 bbl/d in output.
Smaller fields with under 2 billion barrels in reserves also are receiving interest from foreign oil companies. These fields, along with anticipated maximum production levels, include: Nasiriya (250,000 bbl/d); Khurmala (100,000 bbl/d); Hamrin (80,000 bbl/d); and Gharaf (100,000 bbl/d). The Nasiriya development with its access to infrastructure can be utilized as a "reference point" for development of a number of satellite fields.
Service Contracts
In addition to the 25 new field projects, there are plans to offer foreign oil companies service contracts to apply technology to 8 already-producing fields. This will include new reservoir development at the North and South Rumaila, Zubair, Luhais, Subba, Abu Ghirab, Buzurgan, and Fauqi fields.
Western Desert
There are incentives to promote exploration in the remote Western Desert. Located near the Saudi and Jordanian borders. At least 110 prospects from previous seismic work in this region have been identified. Estimated initial costs are put at around $160 million deal to develop an oilfield in this area.
Oil Export Pipelines/Terminals
- Syria (closed now) the 500-mile, 650,000-bbl/d-capacity Banias pipeline which used to give Iraqi access route to the Mediterranean Sea and European oil markets.
- Kirkuk-Ceyhan pipeline allowed Iraq to export of 1.6 MMBD.
- The IPSA pipelines across Saudi Arabia of some 800,000 bbl/d.
- Mina al-Bakr terminal export about 300,000 bbl/d
- By truck through Turkey of some 100,000 bbl/d.
Pipelines
The 600-mile Kirkuk-Ceyhan pipeline is Iraq's largest operable crude export pipeline. This Iraq-Turkey link consists of two parallel lines built in 1977 and 1987. A 40-inch line has a fully-operational capacity of 1.1 MMBD. A second, parallel 46-inch line has an optimal capacity of 500,000 bbl/d and was designed to carry Basra Regular exports, for a combined capacity of 1.6 MMBD. At present, however, total capacity on these lines appears to be little more than half of that due to corrosion damage on the smaller line between the IT-1 and IT-1A pumping stations. The 40-inch line has additional pumping stations and fewer bottlenecks, which allow for greater throughput than that of the larger line. In the Gulf War, both pipelines were disabled when the crucial IT-2 pumping station, located about 93 miles south of the Turkish border, was destroyed. Restoring IT-2 reportedly would allow pumping of 1.6 MMBD through the system. To make IT-2 operational, Iraqi officials have said that they need controls and associated valves costing around $50 million. The IT-1 pumping station near Kirkuk received lighter damage and is presently functional. The subsequent imposition of U.N. sanctions on Iraqi crude exports resulted in a complete closure of the Kirkuk-Ceyhan pipeline between 1991 and 1996. In September 1997, Iraq briefly threatened to stop pumping oil through the Kirkuk-Ceyhan pipeline unless it received requested spare parts it said were needed to repair the line.
When operational, between 450,000-600,000 bbl/d of Iraqi crude was exported to European markets through the Banias line, with the rest feeding Syria's Banias and Homs refineries and Lebanon's smaller Tripoli refinery. Since the closure, Syria has used the line to transport 360,000-bbl/d of its own crude output from the Dair al-Zur area to the Banias export terminal. In addition, a 60-mile stretch of the line has been converted by Syria to carry natural gas (to the fertilizer complex and refinery at Homs). Other constraints on using this line for Iraqi exports include: limited oil storage facilities at Banias; corrosion damage to unused portions of the pipeline in Syria.
Following the 1982 Banias line closure, Saudi Arabia agreed to allow Iraq to export 500,000 bbl/d of crude through the Saudi Petroline to the Red Sea. Then, between 1983 and 1988, two Iraqi pipelines across Saudi Arabia (IPSA-1 and IPSA-2) were built. The first phase -- from Rumaila to the Petroline's PS3 pumping station -- was completed in 1985, when the second phase IPSA-2 project was begun. IPSA-2 included construction of a 1.65-million-bbl/d capacity line running parallel to the Petroline, an additional pumping station to boost IPSA-1's capacity to 1.65 MMBD, storage facilities, and a new Red Sea terminal. Iraqi crude began flowing through the IPSA lines in January 1990. Following Iraq's invasion of Kuwait in August 1990, Saudi Arabia closed the IPSA link, which now apparently has been emptied of oil and filled with water for maintenance.
In order to optimize export capabilities, Iraq constructed a reversible, 1.4-MMBD "Strategic Pipeline" in 1975. This pipeline consists of two parallel 700,000 bbl/d lines. The system allows for export of northern Kirkuk crude from the Persian Gulf and for southern Rumaila crudes to be shipped through Turkey.
Under its post-sanction development plans, Iraq plans to add several new solar-powered pumping stations to boost the pipeline's overall capacity. Iraq also plans to expand the country's crude storage capabilities from 14 million barrels to 21-24 million barrels. Most of this work will center on the Fao tank farm.
Oil Export Terminals
In the Arabian Gulf, Iraq has three tanker terminals: at Mina al-Bakr, Khor al-Amaya, and Khor al-Zubair.
Mina al-Bakr is Iraq's largest oil terminal, with four 400,000-bbl/d capacity berths capable of handling very large crude carriers (VLCCs). The terminal has a capacity as high as 1.2 MMBD.
Khor al-Amaya terminal could load 600,000 bbl/d. Upon full completion of repairs, Iraq projects Khor al-Amaya's capacity will rise to 1.2 MMBD.
Khor al-Zubair Iraq's third terminal, is linked to the Umm Qasr port by a 30-mile long canal. While Khor al-Zubair generally handles dry goods, it has the capability to service small quantities of liquefied petroleum gas (LPG) and refined products. Like Umm Qasr, Khor al-Zubair is being outfitted with crude loading capabilities.
Refining
Iraq's current refining capacity is believed to be around 350,000 bbl/d Iraq has 10 refineries and topping units. The largest are the 150,000-bbl/d Baiji North, 140,000-bbl/d Baiji Salaheddin, 126,000-bbl/d Basra, and 100,000-bbl/d Daura plants. There are plans attracting foreign investment to perform refinery upgrades and building a new $1-billion, 290,000-bbl/d "Central" refinery near Babylon.
NATURAL GAS
Iraq contains 110 trillion cubic feet (Tcf) of proven natural gas reserves, along with roughly 150 Tcf in probable reserves. About 70% of Iraq's gas reserves are associated gas (gas produced in conjunction with oil), with the rest made up of non-associated gas (20%) and dome gas (10%). Until 1990, all of Iraq's natural gas production was from associated fields. In 1996, Iraq produced slightly more than 128 billion cubic feet (Bcf), down drastically from peak output levels of 700 Bcf in 1979. Within two years after the lifting of U.N. sanctions, Iraq hopes to produce 550 Bcf of gas. Within a decade, Iraq aims to be producing about 4.2 Tcf of gas annually.
Iraq invited international partners to invest in natural gas projects worth $4.2 billion.
Iraq's primary sources of associated gas are the Kirkuk, Ain Zalah, Butmah, and Bai Hassan oil fields in northern Iraq as well as the North and South Rumaila and Zubair fields in the south. About 70% of Iraq's associated gas production capacity is located in southern part of the country. Gas flaring was reduced from roughly 50% in 1989 to under 5% in 1994. This was accomplished mainly through increased use of Iraq's two gas gathering systems, which were built in the 1980s. The Northern Area Gas Project started operation in 1983. It is able to recover and process up to 550 million cubic feet per day (Mmcf/d) of sour gas, with a resulting maximum output capacity of 300 Mmcf/d of dry gas as well as a mix of propane, butane, natural gasoline, and pure sulfur. The Southern Area Gas Project was completed in 1985, but was not brought online until February 1990. It has nine gathering stations and a larger processing capacity of 1.5 billion cubic feet per day. Gas gathered from the North and South Rumaila and Zubair fields is carried via pipeline to a 575-Mmcf/d natural gas liquids (NGL) fractionation plant in Zubair and a 100-Mmcf/d processing plant in Basra. At Khor al-Zubair, a 17.5 million cubic foot LPG storage tank farm and loading terminals were added to the southern gas system in 1990. LPG export capacity was 4 million tons per year in 1990. In addition, Iraq built another system in 1985 to recover up to 200 Mmcf/d of gas from the Jambur field.
Iraq's only non-associated gas production is from the Anfal field in northern Iraq. Anfal was brought online in 1990 with output of 200 Mmcf/d. Anfal production is piped to the Jambur gas processing station near the Kirkuk field, which is 20 miles away. Anfal's gas resources are estimated at 4.5 Tcf, of which 1.8 Tcf is proven.
Gas projects are estimated at $2.8 billion cost, $1.8 billion will be for field development and pipeline construction work inside Iraq. Iraq is seeking foreign participation in this project.
|
Planned Oil & Gas Field Developments in Iraq as of March 2000 |
|||
|
Field |
Recoverable
Reserves |
Peak
Production Potential |
Total Project Cost |
|
1.4 |
90,000 |
$700 million |
|
|
0.8 |
EOR only |
? |
|
|
1 |
100,000 |
$500 million |
|
|
2-5 |
225,000 |
$2 billion |
|
|
1-3 |
80,000 |
||
|
Khurmala |
1.5 |
100,000 |
$250 million |
|
1-2 |
30,000 |
$100 million |
|
|
10-30 |
600,000 |
$3-$4 billion |
|
|
Gas Fields |
9.5 Tcf |
1 Bcf/d of gas |
$2 billion |
|
Nahr Umr (Bin Umr) |
6 |
440,000 |
$3.4 billion |
|
2 |
300,000 |
$1.9 billion |
|
|
3-4 |
development of new reservoir to boost prd to 500,000 |
$2.5 billion |
|
|
1 |
100,000 |
$500 million |
|
|
2 |
200,000 |
$1.3 billion |
|
|
1-2 |
50,000 |
$100 million |
|
|
1 |
180,000 |
$500 million |
|
|
15 |
600,000 |
$3.7 billion |
|
|
The Western Desert |
Unexplored |
? |
$160 million |
|
Sources: MEES, PIW, OGJ, Oil Daily, Arab Oil & Gas Directory |
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