Iraqi Oil Minister Hussein Shahristani (center) and Khaled al-Attiya, first deputy Parliament speaker (second right) at the Dubai conference on the controversial bill to open Iraq’s oil sector to foreign investors.

Iraq’s oil reserves could be almost twice as vast as current estimates, and its production could also double in five years, a report from consultancy IHS has showed, The Financial Times reported.  

According to the business daily, the report, which it said was the most comprehensive independent survey of Iraq’s resources since the American invasion of the country in March 2003, noted that such developments were dependent on an improving security situation in the country.

“Obviously the security situation is very bad, but when you look at the sub-surface opportunity, there isn’t anywhere like this”, Ron Mobed, head of IHS’s energy division, was quoted as saying by the FT. “Geologically, it’s right up there, a gold star opportunity”.

Doubling Iraq’s oil reserves would mean an increase of 100 billion barrels of oil, which would make it the second-biggest source of oil reserves in the world, after Saudi Arabia and ahead of Iran, the FT said. Iraq is currently third on that list with 116 billion barrels of reserves.

IHS also said that Iraq could double its current rate of production in five years to four million barrels of oil a day, if international investment into Iraq increases.

The consultancy’s study of Iraq’s oil reserves is based on data collected before and after the 2003 invasion, and its prediction of an additional 100 billion barrels of oil there is based on an analysis of geological surveys.

It is all dependent on improved security in the country, and that has been slow in coming.

‘Draft law keeps oil in Iraqi hands’

Iraqi officials insisted Wednesday that a controversial bill due to be submitted to Parliament will keep the country’s oil wealth in Iraqi hands and benefit all of its warring communities.

“Under no circumstances would Iraq relinquish its authority, its responsibility and its control over Iraq’s natural resources”, Oil Minister Hussein Shahristani told reporters in the United Arab Emirates.

The bill, approved by the Shiite-led government in February after months of wrangling, opens Iraq’s oil sector to foreign investors.

But Shahristani said incentives to international oil companies to invest in the industry would be through the profit margins they will achieve, “not by control of Iraq’s wealth.”

Some Iraqi oil experts and politicians have voiced concern that production sharing contracts envisaged by the bill will deliver the country’s oil riches to foreign firms on a platter.

Others have objected to powers given to regional authorities to negotiate contracts.

Iraq has proven reserves of some 115 billion barrels, and could produce 10 million barrels per day (BPD) for several decades, according to analysts.

But current output reaches barely two million BPD as a result of the combined effects of decades of under-investment in infrastructure and rampant insecurity since the invasion.

The draft law, which would create a federal oil and gas council, aims to distribute oil revenues equitably among Iraq’s 18 provinces on the basis of their populations through a federal account.

The proposed central fund shows that the law “is in the interest of all Iraq, not [just] the producing regions”, Planning Minister Ali Baban told the conference.

Most oil production is in the Shiite South, with the best prospects for new finds centred on the mainly-Kurdish North, which has its own regional government.

The Kurds also claim the existing northern oilfields around the city of Kirkuk, despite opposition from Arab and Turkmen residents.

The Sunnite Arab former elite, which lives mainly in areas of Central Iraq without oil reserves, has voiced concern that under a fully federal system it might lose out on its share of oil income.

But the Kurdish regional government’s oil minister, Ashti Hawrami, said the bill agreed by the government already went too far in trying to assuage Sunnite fears and did not square with the federal provisions of the constitution.

Hawrami complained that annexes to the bill envisage putting 82 percent of Iraq’s oil reserves under the control of a “centralized and inefficient institution”, an allusion to the state Iraqi National Oil Company, which would be revived under the legislation.

Should Parliament fail to pass the law by the agreed end-of-May deadline, the Kurdistan government would award its own contracts, Hawrami said.

He said the regional government wanted to “directly manage” its share of oil revenues and not be told by the federal government how to spend its money.

 

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