Iraqi oil field begins production

The country has started pumping crude from a giant oilfield it discovered in 1975, with the aim of quickly boosting the country's crude exports.

Iraq has started pumping from a giant oilfield it discovered in 1975, with the aim of quickly boosting the country's crude exports. The field, in southern Iraq, is thought to contain 4.3 billion barrels of reserves, but was undeveloped for more than three decades due to war, economic sanctions and lack of funds. "We have started experimental production from Nassiriyah oilfield at a rate of 10,000 barrels per day (bpd)," Fayad al Nema, the director general of the Iraqi state-owned South Oil Company (SOC), told Dow Jones. The field's output would be increased gradually to 20,000 bpd within the next few days and was expected to reach 50,000 bpd within a year, he said. Industry experts have estimated that Nassiriyah's output could reach 300,000 bpd if the field is properly developed. The development schedule, which forms part of a two-year "crush plan" that Iraq's oil ministry proposed earlier this year to raise production from the country's southern oilfields by 350,000 to 500,000 bpd, is subject to direct negotiations between the ministry and three foreign oil companies: Eni of Italy, Repsol of Spain and Nippon Oil of Japan. The Iraqi oil minister, Dr Hussein al Shahristani, has been under intense political pressure to reverse a decline in output from the country's southern fields, which account for about 75 per cent of Iraq's 2.45 million bpd of total oil production. The centrepiece of that plan is an auction of long-term contracts to develop six of Iraq's biggest oilfields and two gasfields on which foreign companies will bid at the end of this month. But the bidding round has proved a touchstone for domestic dissent that has landed Dr al Shahristani at the centre of a multipronged attack on his policies by Iraqi parliamentarians, the regional government of Iraq's semi-autonomous Kurdish region and SOC's engineers and technocrats. Following a revolt by Mr al Nema and his staff, the oil minister is to face questioning in parliament today over the bidding round. In a letter dated June 10, Mr al Nema said SOC's alternative plan to develop Iraq's petroleum assets with limited foreign input would have raised output faster, and at lower cost to the country, than the bidding round proposed by the ministry. On Sunday, the Kurdistan regional government said the contract awards would be "unconstitutional and against the economic interests of the Iraqi people". Iraq's central government said the same day that the auction would go ahead despite the protests. "The oil minister will explain the government's policy," Ali al Dabbagh, a spokesman for the government, told Bloomberg. "We confirm that the bidding round will carry on as scheduled." [e-mail]