Baghdad reached agreement with an Italian-led consortium on Tuesday to dramatically ramp up oil production in southern Iraq, and was considering competing bids from rival energy giants on another field. Oil Minister Hussein al-Shahristani told a news conference in Baghdad that he wanted to see crude production increased to between 10 and 12 million barrels per day within six years - up from around 2.5 million bpd currently.
His announcement comes two months before a second round of auctions on oilfields Baghdad hopes will help it alleviate a budget crunch and rebuild a moribund economy and dated infrastructure wracked by decades of war and sanctions. "All the oil revenue we receive will be allocated for the reconstruction and rebuilding of Iraq," Shahristani told reporters. "What we expect from the first bid round and what we hope for from the second round, Iraqi production will be between 10 to 12 million bpd and this will make Iraq equal to the world's biggest oil producers," he added, referring to an auction in June and another due in early December.
Iraq originally offered eight oil and gas fields to foreign energy companies at the June auction, but only Britain's BP and China's CNPC reached agreement with Baghdad at the time.
Around 86 percent of Iraq's government revenues are from oil sales, and the country's various rebuilding projects, from defence to infrastructure, are facing a crunch because of limited funds. Shahristani announced that Baghdad had reached agreement with a consortium led by Italian energy giant ENI for work on the Zubair oilfield in southern Iraq.
The consortium is made up of ENI, China's Sinopec, Occidental Petroleum Corporation of the United States and Korea Gas Corporation of South Korea. It will be paid two dollars for each extra barrel of oil it extracts on top of current production at the field, but will be taxed on its profits, Shahristani said.
Zubair produces around 227,000 bpd, according to oil ministry figures released earlier this year, and has reserves of around four billion barrels. Shahristani said he wanted oil production at the field to increase by 1.125 million bpd within six years. He added that competing consortiums led by US energy giant Exxon Mobil and Russia's Lukoil had submitted bids that meet Iraq's conditions for the West Qurna 1 field.
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