Iraq Oil Exports to Increase With New Offshore Facilities in Persian Gulf

Iraq’s oil exports will increase next year when two new offshore mooring facilities for tankers are completed and the country’s Kurdish region resumes shipments of crude, Oil Minister Hussain Shahristani said.

Shahristani also told reporters in Baghdad today that a $12.5 billion agreement between Iraq, Royal Dutch Shell Plc and Mitsubishi Corp. for the capture of flared-off natural gas will not be ready this week.

Lawyers representing the companies and the government will meet tomorrow to discuss the final draft of the agreement, which still requires approval from Iraq’s Council of Ministers, he said.

While Iraq generates most of its revenue from oil sales, the government is seeking to produce gas as fuel for power plants and for export. The country awarded licenses in October in its first auction of gas concessions since the U.S.-led invasion that ousted Saddam Hussein in 2003.

Iraq has the world’s fifth-largest oil reserves, excluding oil in its semi-autonomous northern Kurdish territory, and its gas reserves rank fifth in size in the Middle East, according to data from BP Plc.

The Kurdistan Regional Government told the central government that it was ready to export 150,000 barrels of oil a day in 2011 through a pipeline to Turkey, Shahristani said. Kurdistan’s oil exports will be handled by the State Oil Marketing Organization.

Repaying Expenses

Iraq’s central government may reimburse some of the expenses of companies that have signed contracts with Kurdish authorities, with ownership of those assets transferring over to the government in Baghdad, he said.

“The companies can present invoices for costs on equipment or drilled wells in Iraq, and if they are reasonable, like the ones signed by the Oil Ministry with other companies, the costs will be paid and the ownership will be transferred to Iraq,” Shahristani said.

Oil supplies from the Kurdish region of northern Iraq halted a year ago after it failed to agree with the central government about how to pay operators including DNO International ASA and Addax Petroleum Corp.

“Iraq’s oil production is rising steadily, but our export facilities are still not up to the required capacity to absorb production levels,” he said. “There are four offshore moorings under construction in southern Iraq, and when two of them start working next year, crude exports will rise.”

Doubling Capacity

Iraq plans to start work in mid-December on offshore oil facilities in the south, where export capacity is due to more than double by mid-2012, the head of the state-owned South Oil Co. said on Nov. 26. Export capacity will increase to 4.5 million barrels a day by mid-2012 from the current 1.8 million barrels a day, Director General Dhia Jaafar al-Musawi said.

The country plans to build two offshore “megapipelines” and three single-buoy moorings where tankers can load crude in the Persian Gulf. Each mooring will add some 900,000 barrels a day in offshore loading capacity. Half of the surveying and the clearing away of unexploded munitions required for this expansion has been done, al-Musawi said.

Iraq exported 58.7 million barrels, or about 1.89 million barrels a day, in October, the State Oil Marketing Organization said. The exports generated the highest revenue this year with $4.526 billion.

Pipeline to Syria

Iraq and Syria have completed technical talks about a planned pipeline for transporting Iraqi oil to Mediterranean ports, AlWatan daily reported, citing an official speaking with the Kurdistan Independent News Agency. The results of the talks were positive, and Iraqi officials will report on the discussions within three days, the Damascus-based newspaper reported, citing comments by an adviser to the Iraqi government, Salam Al-Quraishi, talking to AKNEWS, the Kurdish news agency.

The 225-kilometer (140-mile) pipeline would transport Iraqi crude across Syria to the Mediterranean Sea and have an export capacity of about 1.7 million barrels of oil a day, he said.

A pipeline with a capacity of 600,000 barrels a day already links Iraq’s northern oil fields in Kirkuk to the Mediterranean port of Ceyhan, Turkey.

To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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