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Thu, Aug 05, 2004 - Page 12 News List

Iraq wants to know how much oil it has

EVALUATION At least 16 companies are expected to submit bids for the job of exploring the country's two oldest and largest fields


A tower at the Basra South oil refinery in Basra flares as it cooks off natural gas in this file photograph from May 20. Iraq's Oil Ministry is undertaking the first comprehensive evaluation in decades of two biggest Iraqi fields in production in an attempt to find out just how much oil the country has.


Iraq has an immense amount of oil, but no one knows in detail just how much is there, not even the country's Oil Ministry.

So the ministry is undertaking the first comprehensive evaluation in decades of the two biggest fields now in production, at Rumaila in the south and at Kirkuk in the north. And it has invited dozens of foreign energy companies to compete for the job of sizing them up.

At least 16 companies, some of them giant oil producers and others independent engineering contractors, are preparing bids, according to executives at two of the companies. Bids are due Aug. 15, they said, and the contracts are expected to be awarded in October.

The projects will be the first application of state of the art oil exploration technology to Iraq's resources since before the Iran-Iraq war of the 1980s.

"These are our oldest fields," said Falah Khawaja, the Oil Ministry's director general for management, human relations and government, speaking of the Kirkuk region, where production began in the 1920s.

"It is high time that they are investigated," he said.

Though the contracts will be relatively small, worth perhaps US$10 million each, their effect could be great, both for Iraq and for world energy markets, officials and independent experts said. Determining how much oil is in the ground and how it can best be recovered are essential steps in rebuilding and modernizing the Iraqi oil industry, they said.

More reliable data on Iraq's oil could also help calm turbulent commodity markets, where futures prices have soared to new records, in part on fears of supply shortages and disruptions from terrorism.

BP and Royal Dutch/Shell are among the major producers that are considering bidding on the contracts, according to spokesmen for each company. Despite France's long history of involvement in Iraqi oil fields, the French company Total will not be bidding, a spokeswoman said; neither will Statoil of Norway.

Wayne Kelley, managing director of the RSK Group, an independent oil engineering firm, is preparing a bid in partnership with Ryder Scott Petroleum Consultants of Houston. Tigris Petroleum, an Australian consulting firm with experience in Iraq, also plans to bid.

It is not clear if US-based Halliburton, the construction and oil field services company, was invited by the Oil Ministry to bid. The company was hired the Bush administration to repair pipelines and other oil facilities in Iraq after the invasion.

Another company regarded as a plausible bidder is Lukoil of Russia, which has been working closely with Iraq's Oil Ministry in recent months, and is training 100 Iraqi technicians in western Siberia.

Iraq's potential oil resources are a matter of uncertainty. Its existing fields are estimated to contain reserves of about 115 billion barrels of oil, just less than half those of the world's largest producer, Saudi Arabia.

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