Baghdad, IRAQ — Efforts by Western and Iraqi business leaders help secure a new chapter in Iraqi’s economic stability and growth. A major breakthrough for Iraq’s oil industry is made after three international oil consortiums accept Iraq’s terms to develop two oil fields.
American Iraqi Business Group (AIBG) chairman, Sam Yono shares that recent developments have changed; more companies have agreed to meet Iraq’s price requirements for oil.
Yono leads the largest consortium of independent Western businesses seeking to conduct business in Iraq. AIBG offers education and assistance to Iraqi and Western corporations on securing bids from Iraq and better understanding business opportunities. The business group helps to form collaboration, consortiums, and build synergies to meet the needs of the reemerging Iraqi market.
After a successful endeavor of a winning bid for BP-China’s CNPC consortium which bid $2 per barrel produced to develop the 17.8 billion barrel Rumaila field with a targeted production of 2.85 million barrels per day, up from its current nearly one million barrels a day, more oil consortium’s sought to bid more competitively.
AIBG reports that they can now share that, that a total of three other consortiums also were awarded. One led by Exxon Mobil and Royal Dutch Shell, another by ConocoPhilips, and a third by Russia’s Lukoil.
The consortiums have agreed to develop the 8.6 billion barrel West Qurna Stage 1 oil field for $1.9 per barrel. The consortium led by Italy’s Eni has agreed to develop the country’s 4.1 billion barrel Zubair oil field for $2 per barrel produced based on a target production level of 1.125 million barrels per day.
Minister Hussain al-Shahristani says, “I’m proud with this success. We do believe that it is a big leap in developing Iraqi oil fields.”
AIBG reports that the price requested by the failing companies was two to ten times higher than what the oil ministry was willing to pay.
AIBG reveals that Eni had previously bid $4.8 per barrel to develop the field, while the Lukoil consortium submitted an earlier bid of $6.49 per barrel and the Exxon Mobil-led consortium was asking for $4 per barrel.
Iraq’s minister Al-Shahristani said that the three fields’ combined output would exceed 6 million barrels a day in six years with a total direct investment from these firms expected to be about $100 billion.
AIBG reports that the two deals could be signed within the coming two weeks.
AIBG points out that Iraq will find stability when the Iraqi population feels there is both social and economic justice, and that there are economic opportunities in Iraq. The country needs jobs, daily tasks, and a way to care for their family rather than criminal gangs or insurgent recruitment say AIBG researchers.
Iraq sits on the world’s third-largest oil reserve, with at least 115 billion barrels, the country is producing and exporting far below its potential because of decades of war, lack of investment, U.N. sanctions, a brain drain and insurgent attacks.
Its daily production ranges between 2.3 to 2.4 million barrels a day and exports slightly over 2 million barrels a day.
The country hopes to add 300,000 to 500,000 barrels per day by the end of 2010 through an emergency plan started early this year to drill new wells and install production surface plants in a number of its oil fields in southern Iraq.
The overall fall of oil prices since last year has forced the government to slash spending plans for this year from $79 billion to $58.6 billion. The oil sector represents about 65 percent of gross domestic product and its revenues account for 95 percent of Iraq’s earnings.