Iraq Oil Output to Rise in Early 2011, Minister Says

Iraq forecast a 17 percent rise in oil output next year and invited companies from South Korea and Kazakhstan to sign immediately a delayed contract for the Akkas gas field, Oil Minister Hussain al-Shahristani said.

Iraq, holder of the world’s fifth-largest oil reserves, wants foreign investors to help it boost production of crude and natural gas. Output of both has suffered from insurgent attacks and a lack of investment since Saddam Hussein’s ouster in 2003. Seeking to end the stagnation, the government has awarded 12 oil contracts and three gas licences.

“Iraq’s oil production capacity will increase to 2.75 million barrels a day early next year,” Shahristani said in an interview in Baghdad yesterday.

The country now produces about 2.35 million barrels of crude a day. Shahristani attributed the expected increase to investments by the international oil companies that have signed contracts to develop Iraqi fields.

While Iraq generates most of its revenue from oil sales, the government wants to produce gas as fuel for power plants, which have been unable to meet domestic demand. Officials hope to develop Iraqi gas reserves for electricity and export.

Iraq was to have signed the Akkas gas-field agreement with Korea Gas Corp. and Kazakhstan’s KazMunaiGaz National Co. on Nov. 14. Iraq delayed the signing to clear up a “misunderstanding” over the planned use of fuel from the deposit, Abdul Kareem al-Luaibi, an Oil Ministry deputy, said at the time.

Companies Invited

“We have invited the companies to come to Iraq and sign the contract as soon as possible,” Shahristani said yesterday.

The minister added that negotiations were continuing with Royal Dutch Shell Plc and Mitsubishi Corp. about a project to capture associated gas at oil fields in southern Iraq.

“Until now the negotiations are not completed between the oil ministry and the coalition led by Shell over the creation of the joint gas company,” he said. “Once they are completed, it will be submitted for approval to the Council of Ministers.”

An agreement with Shell and Mitsubishi is due to be signed by the end of January, Ali Hussain Khudair, the director-general of Iraq’s South Gas Co., said on Nov. 25.

The government gave initial approval on June 29 for the creation of a venture with Shell and Mitsubishi, to be called Basra Gas Co. The venture would be owned 51 percent by state-run South Gas, with Shell holding 44 percent and Mitsubishi the remaining 5 percent.