The following report from Reuters suggests Iraqi reserves could be larger than Saudi reserves and three times as large as currently estimated.  I continue to believe that if there is any chance to mitigate the onset of Peak Oil it is the possibility that Iraq will resolve its politics and pass an oil law this year, issue deals to IOC’s next year and begin substantial increases in production by 2011.  Developing land sites can be accomplished with far greater speed than exploiting the off shore fields of Brazil or even Mexico.

Reuters
INTERVIEW-Iraq may have 350 bln barrels of oil - Deputy PM
04.28.08, 9:54 AM ET

Iraq - By Dean Yates

BAGHDAD, April 28 (Reuters) - Iraq may have oil reserves of 350 billion barrels, Deputy Prime Minister Barham Salih said on Monday, a massive figure that is triple the country’s proven reserves and which even exceeds the oil in Saudi Arabia.

Salih said he had seen estimates from “reputable sources, reputable companies” that put Iraq’s reserves at up to 350 billion barrels. He declined to name the sources.

Iraq’s current proven reserves are 115 billion barrels, already the world’s third largest. The country produces around 2.3 million barrels of oil per day (bpd).

“The real tragedy of this country is that Iraq is home to possibly the world’s largest oil reserves. Some estimates put it at 350 billion barrels,” Salih, a key player in attempts to finalise a draft national oil law, told Reuters in an interview.

“Extraction costs are very minimal compared to anywhere else in the world and we are still at 2 million barrels a day of exports. It’s ridiculous.”

Saudi Arabia has about 264 billion barrels of oil, according to statistics compiled by BP (nyse: BP - news - people ). Iran is next with around 137 billion barrels then Iraq with 115 billion.

Iraq, whose primary source of revenue comes from oil, needs huge amounts of investment to boost oil output but also to rebuild the country after years of sanctions and war.

Delays in approving the oil law to govern the industry have held back investment — the current draft being negotiated for example was first agreed by the cabinet in February 2007.

Salih said it was hard to say when the draft might get to parliament, but added there was fresh momentum following recent talks, including discussions with the government in the largely autonomous region of Kurdistan in northern Iraq.

“What I have witnessed over the past three weeks is renewed commitment from the senior leadership to bring this issue to closure, but I do not underestimate the challenges,” he said.

Salih said talks with officials from the Kurdistan Regional Government (KRG) including Nechirvan Barzani, its prime minister, had been positive.

Some Iraqi officials say contracts signed by the KRG with foreign firms are to blame for holding up the draft oil law. Iraq’s oil ministry says the deals are illegal.

But Salih said issues of contracting could be resolved.

He said the KRG had committed to a “transparent” contract process and given its commitment that all revenue from contracts signed in Kurdistan would be retained by the central treasury.

“SUPER MONOPOLY”

Asked if the KRG was talking only about future contracts, Salih said it included existing deals with foreign companies.

Salih said he believed the biggest obstacle to the draft oil law was deciding the role of the state in the management of the oil sector including who had ultimate control of reserves.

He said there were some efforts to make a restructured Iraqi National Oil Company the “super monopoly” of the industry.

“The real dilemma is whether we want to go back to a situation where a state monopoly will manage the oil sector, or rather mismanage it, as it has over the decades,” he said.

“We do not want to cut down on bureaucracy (the oil ministry) to create a super bureaucracy elsewhere. This is a fundamental problem we have. It’s nothing to do with the KRG.”

Oil majors BP, Chevron (nyse: CVX - news - people ), Exxon Mobil (nyse: XOM - news - people ), Royal Dutch Shell (nyse: RDSA - news - people ) and Total have been positioning themselves for years in the hope of eventually gaining access to Iraq’s abundant reserves.

Iraq is negotiating deals with those companies for two-year oil service contracts at some of the biggest fields that aim to boost the country’s oil output by 500,000 bpd.

Salih expressed frustration Iraq was producing so little oil compared to its reserves.

“We are still talking about technical service agreements with majors at a time when oil prices are at record levels and the world needs (our oil). To me that is obscene,” he said.

“We need to recognise that even existing plans of say 5-6 years from now to reach 6 million barrels a day are totally outdated. These plans were from 1989 at a time when estimates of Iraqi reserves were like 110 or 120 billion barrels.” (Editing by James Jukwey)

Tags: peak oil energy investments

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