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Iraq’s 2013 oil target within reach, 2014 to disappoint

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Fri Jun 21, 2013 10:39am EDT

* Production flatlines at 3 mln bpd in first half

* Target of 3.4 mln by end year “doable”

* New oilfields due on stream include Shell’s Majnoon

* 2014 goal of 4.5 mln bpd seen as unachievable

By Peg Mackey and Alex Lawler

LONDON, June 21 (Reuters) – Iraq’s oil output target for 2013 is still within reach, even with flows stuck at 3 million barrels a day during the first half of the year, but a lofty goal for 2014 will be far more difficult to meet, oil executives and officials say.

Baghdad has already backtracked on an initial 2013 target of 3.7 million barrels per day (bpd), which – with projected growth of 700,000 bpd – unnerved regional rivals, including OPEC heavyweight Saudi Arabia.

The aim now is to hit 3.4 million bpd by the end of December as giant southern oilfields pump new oil and flows rise from those already producing.

“This is not a high target – it could be reached with no trouble within this year,” Jabbar al-Luaibi, former senior oil ministry adviser and previously head of Iraq’s South Oil Co told Reuters.

After flatlining for decades due to wars and sanctions, Iraq’s output began to expand in 2010 after it secured service contracts with oil titans such as BP, Royal Dutch Shell , Eni and Exxon Mobil.

Since then, output has risen by 600,000 bpd to 3 million bpd courtesy of higher flows from the southern giants of Rumaila, West Qurna-1 and Zubair.

The chief executive of British oil company BP – in charge of operations at Iraq’s biggest oilfield Rumaila – also expects Iraq to achieve its end-year production aim.

“I think it’s doable,” Bob Dudley told Reuters.

Reaching rates of 3.4 million bpd will require the start-up of more southern oilfields – Majnoon, operated by Shell, and West Qurna-2, run by Russia’s Lukoil. Garraf, also in the south, and Badra – farther north – will also contribute.

Majnoon is expected to ramp up in July and the field could be pumping up to 175,000 bpd by the end of the year.

But officials say Iraq’s chance of hitting a more challenging output target of 4.5 million bpd, excluding autonomous Kurdistan, by the end of 2014 is unlikely, given infrastructure and logistical constraints.

Flows from Iraq, now OPEC’s second-largest producer after it overtook Iran in 2012, are still expected to rise in 2014, but not by enough to reach the official target.

“Production of 3.8 to 4 million barrels a day is within comfortable reach for next year,” said Luaibi. BP’s Dudley said much higher rates were dependent on infrastructure.

Baghdad is determined to see swift development of its core southern oilfields, fast-tracking of a crucial water injection scheme and timely installation of infrastructure running from wellheads to export points, said Thamir Ghadhban, energy adviser to Iraq’s prime minister.

Though well-intentioned, the world’s fifth biggest oil reserves holder is likely to fall short of its challenging 2014 production target.

“Everybody knows that Iraq is well endowed with natural resources – especially oil and gas,” Ghadhban, former oil minister of Iraq, said at an energy conference this week.

“But the 4.5 million barrels a day looks a bit ambitious compared to our present production.” (Editing by James Jukwey)

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