Iraq govt boosting oil infrastructure, production

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Iraqi deputy minister for energy affairs said the government is studying plans to diversify into petrochemicals, expand its pipelines and explore sea for energy.

The announcement came amid reports the country is pumping oil at the highest rate since Saddam Hussein seized power in 1979.

“When we talk about petrochemical complexes, we are not talking about small plants here and there, but to transform Iraq into one of the major countries producing petrochemicals,” Hussain al-Shahristani said in an interview with Bloomberg. “We are talking about more than 10 million tonnes a year.”

According to data compiled by Bloomberg, Iraq has boosted its crude output by 45% since the American occupation began in 2003.

The country is OPEC’s third-largest producer and is poised to overtake Iran as the group’s no. 2 supplier by the end of the year. According to the oil ministry data, Baghdad pumped 3.03 million barrels a day in April. “We target to pump more than 4 million barrels in 2013,”  Asim Jihad, a ministry spokesman, said.

More than 45 companies, including BP and Royal Dutch Shell, have pre-qualified for the drilling rights in 12 areas. The government is aggressively seeking foreign investment and expertise to develop oil and natural gas across the country including the Kurdistan autonomous region. Iraq holds the world’s fifth-largest crude reserves, according to data from BP.

“Offshore exploration is among the priorities,” Shahristani said Sunday adding that the oil ministry has postponed plans to include an offshore field among the blocks it wants to auction on 30 May because the seabed is still scattered with explosive mines from ‘past wars’.

Oil production has reached record levels since a US-led invasion in 2003 toppled Saddam Hussein’s government. The US-backed government has awarded 15 exploration licenses to international energy companies since the war ended in 2003.

“Foreign investors have expressed interest in helping Iraq build petrochemical complexes and fertilizer factories, including those using phosphates,” Shahristani said adding that Iraq is considered to have among the world’s largest reserves of phosphate.

“The government plans to develop phosphate mines in Al Anbar province,” he added. The Iraqi minister pledged his government’s efforts to diversify into manufacturing steel.

Iraqi crude exports have also been affected by the 1 April decision by Kurdish authorities in northern Iraq to halt shipments through a pipeline controlled by the central government. Both Baghdad and Erbil have been at odds over how to share oil revenue, and their dispute threatens projects led by Exxon Mobil Corp. and other foreign investors.

Shahristani expressed his surprise at reports that Kurdish authorities plan to build separate pipelines so the region can export crude from Kurdish fields through Turkey without using Iraq’s national network.

“This is contrary to the laws in force, and contrary to what Kurdistan had been doing, as it had always pumped through the Iraqi network and its revenues always came to the central treasury,” the deputy energy minister said.

An agreement between Iraq and Turkey commits the Turks to dealing only with Iraq’s State Oil Marketing Co and to receive Iraqi crude only through the national pipeline, he insisted.

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