$10 Billion for a Year of Hard Work

By Stan Harbison, Vice President of Research and Analysis at energy consultants EPRINC.

A year ago, Iraqi oil officials were no doubt justifiably proud of their achievement in 2009. Against all skepticism they had in hand contractual agreements with foreign oil companies to rapidly develop over 60 billion barrels of oil reserves. It was an historic achievement. In the past year Iraq has increased its oil production by 300 thousand barrels per day. Its production level is now over 2.7million barrels per day, the highest level in 20 years. In the past several weeks, this has been confirmed by detailed ship-by-ship export volumes. The incremental production will be worth $10 billion at current prices over 2011. This will bring total Iraqi export revenues to $80 billion, $20 billion more than current government projections in the Iraqi budget.

The greatest achievement is not the increased volumes of oil. It is the concrete confirmation that the Iraq’ new oil setup is working. Contracts ratified in the early months of 2010 are dictating on-time results in the field. Out of view of the press is a tremendous amount of work that has been done. The “Boards of Director” of each project, composed equally of Iraqi and oil company officials, have met on a quarterly basis. They have refined detailed development plans. They have approved the tenders for contracts to oil service companies for drilling, seismic evaluation, assessments of oil reservoirs, construction of field infrastructure, and the installation of production equipment. These are joint government-oil company achievements.

The projects have absorbed most of the thousands of workers of Iraqis largest regional oil company, the South Oil Company. Separately, the Iraqi oil ministry and the existing Iraqi companies under its wing have:

  1. nailed down a firm $700 million contract to build large new export facilities,
  2. rebuilt much of the country’s damaged storage tank and pipeline infrastructure,
  3. established a process to build a massive project which will pipe seawater needed for field operations in the future, and
  4. progressed on plans to build critically needed pipeline capacity to export facilities.

We suspect that all the people involved in these efforts feel a combination of pride, satisfaction, determination to proceed, as well as considerable anxiety about the barriers that need to be crossed to achieve continuing success. This is as it should be. The record so far supports a strong prognosis for continuing success.

Stan Harbison has been an oil and gas analyst since 1982. He has worked as a research investment analyst for a prominent US investment firm for BP, Louis Dreyfus Commodities Energy Trading and for the US. Department of Energy. He has met regularly with top managers in the world’s largest oil companies, key officials in more than ten of the world’s largest National Oil Companies and has attended many OPEC meetings. In the past year, he has devoted all of his time on Iraq’s oil development with EPRINC, (www.eprinc.org), an independent oil analysis firm in Washington DC, which provides analysis on critical emerging issues in the oil industry. Its work is read by the public, the US Congress and key US government officials.

2 Responses to $10 Billion for a Year of Hard Work

  1. peter February 22, 2011 at 9:34 pm #

    Hi Stan,
    Great read..Thank you.Is there any truth to the news report that came out in January of this year quoting some Oil official in Iraq as saying that they now have 500 Bil. in oil reserves ?..( I mean wouldn’t this be earth shaking news ? )It showed up once and nothing else has been mentioned of it / Is it Legit or ?..
    Thanks

  2. James Campbell February 26, 2011 at 12:45 pm #

    I’m beside myself in trying to understand why the GOI can’t get the required Ministries seated after 2 elections. The 2nd round of elections which it’s 1 year date is only a few months away. Does not PM Maliki and the MP’s not care about the country we as Americans fought and died for in order to free the Iraqi people from a Dictator? From what I see, there is too much of a power struggle in the current GOI wanting to advance their own agendas while they let the people do without clean water, electric power, food and jobs. Where is the leadership elected leading Iraq? We as americans have given better than a trillion dollars to Iraq just to see it squandered and wind up in the pockets of corrupt officials living a life of luxury. I would like to see the GOI be stripped of their wealth and forced to live the life 90% of the Iraqi people have to. I believe it would change their actions and do what is right in supplying the needs for all who call Iraq home. Weather Shitte, Sunnis or Kurds and even the others who have chosen to live there.
    We liberated Kuwait from Saddam and then liberated Iraq, helping Iraq establish a democracy to better the people of Iraq. Your people are starving and your unemployment is through the roof while your government allows this to happen by dragging their feet and complaining it is taking time. 7 years is more than enough time to settle differences, seat a full government, pass a budget, and create jobs for the able Iraqi’s to build a life and look forward to what the future holds.
    Between Maliki, Allawi, Barzani and Talabani there should be a GOI for the people according to the Iraqi Constitution, allowing the people to freely speak and protest if need bein order to get the job done!!! The unrest in the Middle East is causing many problems in our country as well as yours’, which we can’t afford at this time and yet we still give our hard earned money to many of them who hate us. We as a nation want all people to be free and be able to choose the course of life they want within the laws of their perspective country.

    Our debt (14 Trillion) has gotten totally out of hand due to the Trillions we give away to other countries in need and in return we get chastised for trying to help. We are not trying to rule anyone or any country for that matter. We are a Nation that helps as much as we can going deeper in debt to do so. Even the nations that despise us expect us to support them and at the same time want us to leave their country feeling as though we are trying to occupy and control them. We as americans along with many other nationalities who have chose to become american citizens give from our own pockets to help any who are in need. We are the first to do so and we give the most. That is the heart we have for humanity.

    Iraq has the ability to be a light to the region you live in and could help in many ways to make a better world for us all. We had to fight for our freedom and we fought for yours and many others. Most of which want to see us fail. Why? If there is a better Nation on the earth who is first to help please let me know. I myself wish you well and I hope your country can can join together to become a prosperous nation who cares for the need of all Iraqi’s so as to show the other Nations around you IT CAN BE DONE! and in a peaceful manner. You are free now. Show the entire world what you can do as a free nation with the natural resources you were blessed with when the world was created. Please don’t let greed get in the way. The opportunity is within your reach and if it is managed correctly it can change the course of history as well as the lives of people all over the world.
    The protest you had yesterday Feb 25, 2011 I felt was as peaceful as could be expected, although there were some casualties which shouldn’t have been. You have the right as humans and under your constitution to do so in a peaceful manor. There were some who didn’t want a peaceful protest and tried to disrupt and cause trouble which lead to so many killed or injured. I’m sorry to see that. I was pulling for the Iraqi people to have their voice heard and force the government to react in a positive way. This remains to be seen (the governments reaction I mean). I hope it is positive and allows you all to live in peace and prosperity.

    Best of regards,

    James Leland Campbell