Crude oil prices are high enough to encourage investments in marginal fields, Iraqi Oil Minister Hussain al-Shahristani said.
Iraq, holder of the world’s third-largest oil reserves, is producing oil at “far below” its potential and plans to add four oil refineries with 750,000 barrels of capacity a day to tap rising demand from Asia, al-Shahristani said at the Asia Oil and Gas Conference in Kuala Lumpur today.
“It’s not expected that there will be much oil available from other parts of the world,” he said. “Any additional demand, particularly from Asia, will have to be met by Iraq.”
The Middle East nation is seeking foreign investors to boost output after six years of conflict and prior sanctions destroyed its infrastructure. The country completed two bidding rounds for oil development rights last year and has awarded a dozen contracts to international companies.
The country will receive $150 billion in investments from fields awarded last year, al-Shahristani said.
Nations counting on oil for revenue and investments have seen income fell as crude prices declined on concern slower growth will sap demand for energy. The price of crude oil in New York lost 14 percent in May, the biggest monthly drop in 18 months, partly on concern the euro region’s debt crisis will slow economic recovery. U.S. crude oil inventories have risen every week but two since the week ended Jan. 22, according to data from the U.S. Department of Energy.
Foster Wheeler AG said last week that it won a contract for a feasibility study and the engineering and design of an oil refinery at Nassiriyah in Iraq, as the Middle Eastern country seeks to boost its capacity to meet domestic demand and allow for some exports.
Iraq plans to build a 300,000 barrel-a-day facility at the southern city of Nassiriyah, Foster Wheeler said in a Business Wire statement June 2. The company didn’t disclose the value of the contract.
“Within a couple of years Iraq should be an exporter of petroleum products rather than an importer,” al-Sharistani said.
Iraq consumed about 638,000 barrels a day of oil products in 2008, up from 596,000 barrels daily in 2007, according to a report from the U.S. Energy Department.
The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil, isn’t planning any emergency meeting before its next scheduled meeting, he said. The next scheduled gathering is on Oct. 14.
Oil prices are “reasonable” and there is no shortage of supply, Mohamed al-Hamli, the United Arab Emirates oil minister. said June 2.
OPEC is set to reduce shipments this month as demand from Europe and the U.S. remains weak, according to tanker-tracker Oil Movements.
OPEC will ship 23.47 million barrels a day in the four weeks to June 19, the consultant said in a report on June 3. That’s down from a revised figure of 23.6 million for the four weeks to June 12 and 23.7 million in the four weeks to June 5. The data exclude Ecuador and Angola.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.