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Iraq’s crude oil reserves may turn out to be much higher than believed, the country’s oil minister Jabar al-Luaibi said at a recent industry event, timing the statement with news that it will pay foreign companies less in new contracts.
Last year, Iraq updated the estimate for its proven reserves to 153 billion barrels from 143 billion barrels, but if Luaibi is right, the figure could actually be double the 2017 estimate.
If the higher estimate proves true, it would make Iraq the largest oil-rich country in the world, ahead of Venezuela, which claims its reserves are just above 300 billion barrels, and also ahead of Saudi Arabia, with 260.8 billion barrels.
Al-Luaibi’s remarks on the reserve estimates come amid preparations for the next oil tender in the country, which is to take place next week and offer 11 exploration blocks to foreign companies.
A total 15 companies have expressed interest in bidding for the blocks in eastern and southern Iraq as the country seeks to increase its production capacity to over 5 million bpd from the current 4.35 million bpd.
But it also comes as Baghdad says it will exclude oil by-products from the revenue of foreign oil companies in new contracts that should be awarded in June. The end result will be reduced productive fees for foreign companies.
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The tender and the possible reserve update suggest Iraq does not plan to continue producing less than capacity for much longer.
This is hardly a surprise: OPEC’s number-two exporter has consistently failed to fit within its production quota under the OPEC+ agreement, forcing Saudi Arabia to reduce its production by more than it had agreed. In fact, were it not for Venezuela’s uncontrollably falling output, OPEC would not have been able to meet its objective of bringing global inventories down enough to stimulate higher prices.
Iraq has not made a secret of its production growth plans. The troubled country, which has yet to erase all traces of the Islamic State’s presence from its territory, depends on crude oil exports for 90 percent of its export revenue and does not have the means or options to initiate a quick economic turnaround.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.