Lukoil Starting New Iraq Oilfield as Output Reaches 35-Year High
OAO Lukoil (LKOH) will start pumping crude from Iraq’s second-largest oilfield tomorrow as the nation boosts output to levels last seen more than three decades ago.
Russia’s biggest publicly traded oil producer will start producing 120,000 barrels a day at West Qurna-2 in the south. The field is expected to eventually yield 1.2 million barrels daily, or about a third of the nation’s current output.
Iraq is now the second-biggest member of the Organization of Petroleum Exporting Countries behind Saudi Arabia after adding 1 million barrels of output since 2007. Wars and sanctions crippled the country for decades, contributing to four of the 11 biggest global supply shocks in the past 60 years, according to the International Energy Agency in Paris.
“Iraq has been the key growth center within OPEC,” said Amrita Sen, the chief oil market strategist at Energy Aspects Ltd. in London.
The nation plans to increase output capacity to 4.7 million barrels a day next year, from about 3 million in 2013, Deputy Prime Minister for Energy Affairs Hussain al-Shahristani said Jan. 28. Exxon Mobil Corp., Royal Dutch Shell (RDSA) Plc and Total SA (FP) are among those helping to rebuild Iraq’s energy industry.
Iraq boosted production to a 35-year high of 3.6 million barrels a day in February, the IEA estimates. Export capacity in the south is rising with offshore facilities to load tankers in the Persian Gulf.
The government is still contending with a dispute over oil revenues in the northern Kurdish region, as well as attacks on a pipeline to Turkey.
West Qurna is 40 miles northwest of Basra. It is divided in two, with West Qurna-1 being developed by a group led by Exxon Mobil (XOM) and West Qurna-2 operated by Lukoil. The latter, with reserves of 13 billion barrels, was discovered in 1973 and explored by Soviet geologists in the 1970s and 1980s. Rumaila in the south is Iraq’s biggest oilfield.
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