BAGHDAD, 17 April 2005 — Iraqi oil exports could increase to 2 million barrels per day by the end of September from current levels of 1.5 million if security in the country improves, the head of state oil marketer SOMO said on Friday.
“With improved security and investment, we can reach exports of 2 million barrels per day by the end of the third quarter,” Dhiaa Al-Bakkaa, director general of SOMO, told Reuters. “We’ve got an allocation of $3 billion for upstream and downstream investment and with the formation of the new government, that money should start to be released. “That would have an immediate positive impact on output, which by the end of the third quarter could increase to 2.8 million-3.0 million barrels per day.”
April output is running at an average of 2.3 and 2.4 million barrels per day, he said, of which 1.5-1.55 million was being exported. The rest is used for domestic consumption, including electricity generation and refining.
Iraq is in the process of forming a new government in the wake of elections held at the end of January, with the shape expected to be finalized in the coming days.
Once the make-up of the government is known, including the crucial Oil Ministry appointment, coveted by several competing factions, investment should begin to flow almost immediately.
“The potential is there for an immediate increase in output because the investment is not in the development of new fields or wells, we just need some investment in water injection and other things,” Bakkaa said.
As well as investment, security is a paramount concern. Repeated sabotage of oil infrastructure, including major export pipelines, has hamstrung Iraq’s production and export capability over the past two years. But Bakkaa said damage caused by insurgents and profiteers was declining. “There has been a considerable decline in sabotage since the election, even if it has not gone away completely,” he said.
A new security force is being put in place to protect the northern export line that flows to Turkey’s port of Ceyhan, an essential link in Iraq’s oil-dependent economy.
The line has been out of commission for months due to sabotage, including repeated bomb attacks in December.
“The potential is there to resume exports through the northern pipeline to Turkey, but the issue is security,” Bakkaa said. “A force is being set up to guard the pipeline and with the formation of the new government that should take effect.”
One of the chief stumbling blocks to the formation of the government has been the appointment of an oil minister.