Iraq has invited foreign Companies to bid in the country's first exploration and production license round since the U.S. invasion in 2003. Companies have until Jan. 31 this year to submit documents to pre-qualify to drill the world's third-largest crude Oil Reserves.
Iraq has an estimated 115 Billion Barrels of proven oil reserves, placing it behind Saudi Arabia and Iran. The country is aiming to boost production to 4 million barrels a day by 2009, but the lack of security and the government's failure to pass a federal energy law have deterred international oil companies.
Royal Dutch Shell Plc and Total SA are reportedly bidding to develop the Akkas gasfield in Anbar province, northwest of Baghdad. However, Ivanhoe Energy, frequently covered by RI (see our coverage in June, April and March of 2007), hopes to co-develop an oilfield in North Central Iraq with Japan's Inpex Corp.
Ivanhoe believes the field is suitable for its heavy-oil upgrading technology. David Martin, Executive Co-Chairman of Ivanhoe Energy, admitted that almost every oil field in Iraq contains over 1 billion barrels, and it would probably be “safe to assume” the same here.
Iraq has potential oil reserves in excess of 215 billion barrels and proven reserves in the region of 115 billion barrels, which puts close to that of Saudi Arabia. Its exploration and development costs are amongst the lowest in the Middle East.
However, Iraq’s oil production has historically not matched its oil reserve capability, and maximum production in any one year has never exceeded 3.5 million barrels per day (bpd), despite an exploration and development history stretching over nearly eight decades.
According to the International Energy Agency, Iraq, a member of OPEC, currently produces about 2.2 bpd, with hopes of moving towards production of 4 million bpd.
Leon Daniel, Deputy Chairman of Ivanhoe Energy said, less than 20% of the potential oil properties in Iraq have been developed.
He said about 52% of the remaining oil reserves in the country were below 28 gravity, “which they consider to be heavy,” with quite a bit below 20 gravity. “They don’t have the refineries” to handle this type of oil, he added.
Robert Abboud, Independent Co-Chairman and Lead Director for Ivanhoe Energy, said the company will closely monitor the development of the new petroleum law now in Iraqi parliament.
The overall objectives of the draft petroleum law are to optimize Iraq’s oil and gas exploitation, maximize return and unite the country. The law is investment friendly, and welcomes international oil companies to work in partnership with the Iraq National Oil Company.
Abboud said “prevailing in the bidding process is critical,” but with a Japan’s largest oil & gas developer, Ivanhoe is confident the companies will be recognized as front runners.
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