Sunday, October 10, 2010

Mission accomplished! Iraq raises oil reserve estimate 24%

Iraq raises oil reserve estimate 24 pct

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Iraq's oil minister on Monday sharply boosted the estimate on the country's proven reserves of oil to 143.1 billion barrels, an almost 25 percent increase that transforms the war-ravaged nation into the home of the world's second-largest proven reserves of conventional crude oil.

The new figure reflects reserves "that can be extracted by available techniques in the country," Hussain al-Shahristani told reporters, adding that this total is based on reserves in 66 oil fields. He said there "are other areas to be explored that are expected to add" more to the reserve total.

The increase is as important psychologically for Iraq as it is economically and practically. The oil-rich nation, which was the birthplace for OPEC, has struggled to raise its oil production and exports after years of sanctions and wars left much of the vital sector in poor shape. Iraq currently exports roughly 1.9 million to 2 million barrels per day - which accounts for nearly all its foreign currency revenues.

But with Saddam's ouster, attention turned again to revamping the sector. Two international oil licensing rounds last year opened the door for international oil firms to re-enter the Iraq market.

Iraq hopes that new production from the 10 oil fields awarded during the two auctions will raise overall output to 12 million barrels per day by 2017 - a level that would put it nearly on par with Saudi Arabia's current production capacity.

"Iraq will officially inform OPEC today in order for these new reserves to be recognized internationally." al-Shahristani said.

"We expect other increases of even these fixed reserves," he said, referring to expectations that continued exploration will result in even more discoveries.

For years, Iraq's proven reserves of crude were listed at 115 billion barrels, with no revisions announced largely because little in the way of field assessment or new exploration was taking place under the country's now-deposed dictator, Saddam Hussein.

That figure meant Iraq was listed as having the world's third largest proven reserves of conventional crude, with Saudi Arabia claiming the top spot with 264.6 billion barrels and Iran ranking second with 137.6 billion barrels, according to the latest BP ( BP - news - people ) Energy Statistical Review.

Factoring in unconventional crude sources, Canada and Venezuela both had far greater reserves than Iran and Iraq. But such reserves, which include oil shale and the tar-like bitumen, are generally far harder to extract than conventional crude oil and are recoverable only at oil prices far higher than those needed to extract oil from countries like Iraq and Saudi Arabia.

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