According to Iraq’s oil minister Abdul Kareem al-Luaibi, the country has 150 billion barrels of oil reserves, and this doesn’t include resources from the autonomous Kurdish region and other additional deposits. The country most likely has more than 200 billion barrels of total reserves. The British oil major BP plc (ADR) (NYSE:BP) thinks that the country has the world’s fifth largest reserves. However, its production has lagged far behind other oil producing nations, particularly during the Gulf War when its output fell dramatically. However, with the help of the leading oil firms from the U.S, Europe and China, such as Exxon Mobil Corporation (NYSE:XOM), Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and PetroChina Company Limited (ADR) (NYSE:PTR), the country has been looking to change its fortunes, despite the immense political hurdles.
|Rumaila||18bn barrels of oil|
|West Qurna II||13bn barrels of oil|
|Majnoon||12.6bn barrels of oil|
|Kirkuk||8.7bn barrels of oil|
|West Qurna I||8bn barrels of oil|
|Zubair||4bn barrels of oil|
The Anglo-Dutch oil major and its Japanese partner Mitsubishi Corp have finally started operations at the massive $17 billion Basrah Gas Co. project in Iraq to capture the associated gas from one of the country’s biggest oil fields. The current budget has also incorporated the possibility of an LNG export terminal to ship the natural gas to other Asian countries via Persian Gulf.
Meanwhile Exxon Mobil Corporation (NYSE:XOM) has taken the controversial decision to start developing wells in the Kurdistan region. On the other hand, it seems to be committed towards developing West Qurna-1.
Associated gas, also called associated petroleum gas or flare gas, is the gas which is produced from the same reservoir as petroleum. Iraq has been largely developing the liquids, not the gas, as it doesn’t have the necessary storage and transportation facilities. Therefore, around 700 million cubic feet of gas is flared and the country ends up losing $2 billion each year.
Basrah Gas: Shell’s progress
An Iraqi government owned company holds 51% stake in the 25-year project while Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and Mitsubishi hold stakes of 44% and 5% respectively. Basrah gas is not only the biggest gas project in the history, it is also the “world’s largest flares reduction project. ”The purpose of the project is to capture the associated gas which is being flared from the three oil fields, Rumaila, West Qurna – 1 and Zubair. These three are one of the nation’s biggest oil fields which is indicated in the table above. The project aims to increase the daily production from the current levels of 400 million cubic feet to 2 billion cubic feet.