LONDON – Iraq has revised its medium-term oil field redevelopment plan, meaning that production will be slightly lower than the previous 12 million barrel a day target, but will maintain its plateau level for 20 years instead of seven, said the country's Deputy Prime Minister for Energy, Hussein al-Shahristani, Wednesday.
Iraq expects to be producing between 5 million and 6 million barrels a day of oil by 2015, around double its current level, Shahristani told reporters at the Iraq Refinery conference in London. He declined to give the revised plateau production target, but said the reduction from 12 million barrels a day will only be minor.
The revision of the plan, which was seen as highly unrealistic by many industry analysts, was undertaken to "maximize the recovery from each field...and extend the plateau production," to 2035, Shahristani said.
Despite the change of plan, the redevelopment of Iraq's depleted old oil fields will remain a significant force in the oil market, Shahristani said. "Iraq is planning to increase its production and exports significantly this year and next year. This should calm the oil market as to the availability of sufficient supply," he said.
The planned oil production increase, from a base of just under 3 million barrels a day currently, will come from the renovation of many large, but depleted oil fields that were starved of investment during decades of sanctions and conflict. Major international oil companies are leading these projects and have already produced an increase in Iraqi production of around 500,000 barrels a day over the past year, Shahristani said.
Shahristani did not agree with comments Tuesday from Venezuelan oil minister, Rafael Ramirez, that the Organization of Petroleum Exporting Countries is over-producing and flooding the market with oil.
"We have not seen any data that indicate there is over-production within OPEC. As a matter of fact, there has been some reduction is supply outside OPEC that has been met by increases in OPEC production. We see the market as balanced," he said.
Shahristani reiterated that Baghdad will not recognize contracts any oil company signs with the regional government in Kurdistan. "Any company that will sign [a contract with the Kurdish government] will be treated in the same way [as Exxon Mobil]," he said. "They will be told that their contract has no standing, that it's illegal."
Pressure from Baghdad has forced Exxon Mobil Corp. (XOM) to freeze its plans for oil exploration in Kurdistan, he said. "Exxon has sent a letter to the ministry of oil confirming that they are not going to take any actions on the ground for field development--shooting seismic, drilling and so on--until their contract is approved by the Iraqi government and a solution has been found. That has been accepted by the ministry of oil," Shahristani said.
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