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Oil minister: Iraq's oil production sees increase

Oil minister: Iraq's oil production sees increase

Iraq's newly appointed oil minister said Wednesday that the country's daily oil production has increased by 100,000 barrels a day to 2.5 million barrels a day, one of the most significant increases since the 2003 U.S.-led invasion.
Oil Minister Abdul-Karim Elaibi also said his ministry's priorities are to develop the dilapidated oil infrastructure and increase export capacity from southern terminals to 4.5 million barrels per day, from the current 1.6 million barrels a day.
Elaibi, who was endorsed by parliament Tuesday as part of a vote on a new government, said in a statement the new increase came from two southern major oil fields which are being developed by international oil companies.
The two are the 17.8 billion barrels Rumaila field, which is being developed by Britain's BP and China's CNPC, and the 4.1 billion barrels Zubair field, which is being developed by Italy's Eni and partners Los Angeles-based Occidental Petroleum Corp. and South Korea's KOGAS.
The statement also alluded to the row between the Arab-led government in Baghdad and the northern self-ruled Kurdish region over more than two dozen oil deals the Kurds unilaterally signed with Western companies. Elaibi's predecessor considered the deals illegal.
"Dialogue with our Kurdish brothers will continue in order to reach solutions to the benefit of all," Elaibi said.
Samuel Ciszuk, Mideast energy analyst with IHS Global Insight in London, said that Elaibi's solid experience in the sector would be an asset as Iraq looks to boost output and revamp its oil industry by overcoming its infrastructure limitations.
Even with his experience, Ciszuk said, reaching even half the 12 million barrel per day production mark, which officials have repeatedly said they are targeting in about six years, will be a stretch.
"Foreign investors will struggle to find enough skilled workers, equipment and material while controlling project costs," Ciszuk said in a report released Wednesday. "The Iraqi side, however, will struggle to muster enough financial resources to resolve the infrastructural bottlenecks for which it is responsible."
Since the toppling of Saddam Hussein's regime, Iraq has struggled to reach prewar production levels of about 2.58 million barrels a day. The industry has been hampered by heavy damage to oil facilities during the U.S.-led invasion, and the looting and insurgents attacks that followed.
In addition, even as Iraq looks to boost output, it faces significant challenges in the form of a shortage of export pipelines, storage terminals and other oil infrastructure necessary for the industry to handle the additional amounts.
Iraq has awarded 15 oil and gas deals since 2008 to international energy companies in the first major investment in the country's energy industry in more than three decades. It plans to raise output to 12 million barrels per day by 2017.
It holds the world's fourth largest oil reserves of 143.1 billion barrels, according to the government's latest estimates. Oil revenues make up nearly 95 percent of Iraq's budget.