Iraq Awards CH2M Water-Injection Oil Project, Replacing Exxon

Iraq awarded CH2M Hill a $170 million consultancy contract for a plan to inject water into southern oil fields to help further boost crude production, according to South Oil Co. Director General Dhia Jaafar.

Iraq’s crude production will rise to as much as 6 million barrels a day in 2015 and 10 million barrels a day by 2020, Deputy Prime Minister Hussain al-Shahristani said in a news conference in Baghdad today. That’s a more optimistic outlook than the International Energy Agency which said yesterday that Iraq may produce as much as 6.1 million barrels a day by 2020 and 8.3 million barrels a day by 2035.

CH2M Hill replaces Exxon Mobil Corp. (XOM) for the project to inject sea water mainly into Rumaila, Zubair and West Qurna oil fields. Talks with Exxon Mobil, which has angered the central Iraq government by reaching separate agreements with the semi- autonomous Kurdish authorities in the north of the country, didn’t lead to an agreement, Zahra al-Hammadi, head of the process department at the State Company for Oil Projects, said in an Oct. 2 interview.

Iraq holds the world’s fifth-largest crude reserves, according to data from BP. The government is seeking international expertise and investment to rebuild the energy industry after decades of conflict and sanctions.

The country’s crude exports rose to 2.7 million barrels a day this month after the Kurdish region resumed crude shipments that had been halted since April because of a conflict with the central government about oil sales, Falah al-Amri, chairman of the State Oil Marketing Organization, said at the news conference in Baghdad.

The state-run South Oil Co.’s production reached 2.25 million barrels a day and is exporting 2.2 million barrels a day, Jaafar said. The output includes 1.4 million barrels a day from Rumaila field, 400,000 barrels a day from West Qurna 1 and 280,000 barrels from Zubair, he said.

Iraq, the world’s third-largest crude exporter, pumped 3.328 million barrels a day at the end of last month, the highest rate since 1979, according to the nation’s Oil Ministry website. In June it surpassed Iran as the second-biggest producer in the Organization of Petroleum Exporting Countries.

To contact the reporters on this story: Kadhim Ajrash in Baghdad at kajrash@bloomberg.net; Nayla Razzouk in Dubai at nrazzouk2@bloomberg.net

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

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