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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: cnyndwllr who wrote (20458)	3/19/2003 4:45:38 PM
From: Ed Ajootian	Respond to of 206095

Iraq oil boost after war would take 2 yrs-experts Wednesday March 19, 12:02 pm ET NEW YORK, March 18 (Reuters) - Iraq's oil industry will need two years of rehabilitation after any U.S.-led war to generate a significant increase in crude production capacity, experts said on Tuesday. Iraqi production could be boosted to 3 million barrels per day (bpd) by 2005, said Martin Purvis, of international oil consultants Wood Mackenzie. Iraq's current sustainable production is estimated at 2.8 million bpd Purvis predicted that by 2012 production from Iraq, which has the world's second largest proven oil reserves behind Saudi Arabia, could be hiked to 6 million bpd. "Iraq has only exploited a few of its largest discoveries and there are many, many fields that remain largely untouched," he said. A short-term rebound in Iraq's production will depend on whether Iraqi President Saddam Hussein torches his own oilfields in any military conflict. After the 1990-91 Gulf War, it took about two years to get Kuwait's oilfields back to normal after Iraqi forces set them on fire. The first energy companies to come to Iraq after a war -- damage to oil wells or not -- would be oil service companies, most likely Halliburton Co. (NYSE:HAL - News) and Schlumberger Ltd. (NYSE:SLB - News), said J.J. Traynor, analyst at Deutsche Bank. After that, longer-term oil reconstruction would be carried out by big oil companies which are more leveraged to take on risk, Traynor added. There is sure to be much jockeying between companies that have signed contracts with Saddam Hussein's government, including Russia's Lukoil (LKOH.RTS), as well companies that have long negotiated with Iraq, such as France's TotalFinaElf (Paris:TOTF.PA - News), and U.S. oil companies that have not signed contracts. TotalFinaElf has looked at projects to develop a number of oil fields in Iraq, including Majnoon and Bin Umar. "During negotiations over these two fields, which could together produce more than 1 million barrels of oil per day, we have had access to data, which could represent a one-year advance in comparison to our competitors if an international bid was launched," said spokesman Paul Floren. Lukoil still hopes to develop Iraq's huge West Qurna oilfield even though Baghdad canceled its contract in December in a diplomatic snub to Moscow. "Lukoil seems to have the tightest contracts with their project at the West Qurna field," said Traynor. "They at least claim that it would be testable against international law in a regime change scenario." Other companies such as TotalFinaElf and Italian energy giant Eni (Milan:ENI.MI - News) may have an advantage at any negotiations with a future government since they have already done a great deal of technical work, said Traynor. But U.S. and foreign companies that do not have existing contracts will have to decide whether they want to sign fresh contracts with the next government or partner with companies that do. "I'm sure BP (Plc (London:BP.L - News)), Exxon Mobil (Corp. XOM.N), ChevronTexaco (Corp. CVX.N), ConocoPhillips (NYSE:COP - News) and Occidental (Petroleum Corp. (NYSE:OXY - News)) are all waiting in the wings to negotiate deals," Traynor said. PUBLIC RELATIONS Western involvement presents a tricky problem. "How do we protect the oil facilities and bring in companies and material to sustain and improve those facilities without being criticized for taking over oil or giving the appearance of somehow taking the oil?" said Amy Myers Jaffe, energy adviser at the Houston-based Baker Institute for Public Policy at Rice University. "That could be very challenging on a public relations basis," she said. Though Iraq could increase production after the U.N. removes sanctions, it might then have to wrestle for position with fellow members of the Organization of Petroleum Exporting Countries. "Would OPEC be able to handle (a 6-million-barrel increase by 2012)? The jury is still out on that," said Jaffe. From 1996 to 2001, Iraqi production has accounted for 30 percent of global oil supply growth. That means Iraqi output has been an important marginal supply in the existing world oil market since the United Nations crafted the oil-for-food program in 1995, according to Jaffe.