Iraqi Oil Fields Development: Profiles Of Production, Depletion And Revenue

Iraqi Oil Fields Development: Profiles Of Production, Depletion And Revenue

By Ahmed Mousa Jiyad

Mr Jiyad is an independent development consultant and scholar and Associate with the Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya@online.no).

Introduction

Between November 2008 and May 2010 the Iraqi Ministry of Oil signed 12 long term technical service contracts covering 14 oil fields. The oil field projects fall in two categories: brown-field and green-fields developments. The brown-field projects are Rumaila, West Qurna Phase 1 (WQ1), Zubair and the Misan group (the Buzorgan, Abu Ghirab and Fawqa oil fields). These oil fields are already producing and have relatively a long history of production with good deal of related information. The green-fields are generally discovered, but they are not producing commercially. These are West Qurna-2 (WQ2), Majnoun, Halfaya, Gharaf, Badra, Qayara, Najma, and al-Ahdab. Total proven reserves of these oil fields amounts to 67.929bn barrels, representing 59.1% of Iraq’s currently proven reserves of 115bn barrels. And when they are fully developed according to the contracted timelines and production targets, their total production capacity would reach a peck of 11.815mn b/d, sustained for the six consecutive years 2017-22.

For each oil field, annual production over the 20 years of the contract period was calculated according to the plateau production period (PPP) and their relative production plateau target (PPT) as specified in the field’s contract. As for the post-PPP period, annual production was estimated with the officially adopted 5% decline per annum. For the pre-PPP period, annual production was assumed to increase progressively from the 2009 level to PPT.

Contracts governing the development of these oil fields are structurally similar but with some major differences, which effectively split them into three types. One type is related to the brown-fields, the second is related to the green-fields, while the third is specific to the Ahdab oil field.

Brown-Fields: Rehabilitation, Re/Development And Production Phases

Annual production capacity for all these oil fields progresses through four distinct common phases. The first is rehabilitation phase (ReP), which should not exceed three years from the effective date of the contract. This phase intends to achieve basic objectives: to recapture the decline in the production of the fields; to replace the agreed upon decline in the baseline production of 5% annually; and to attain the 10% increase over the baseline production to ensure the early recovery of invested capital and to receive the remuneration fee (RF) according to the related provisions of the contract. This would be followed by the development/redevelopment phase (D/ReD P), which takes another three years, and is aimed at attaining progressively significant production capacity, leading to the contracted PPT during the PPP phase of seven years. The last phase, the declining production phase (DPP), covers the remaining seven years of the contract period.

The following chart illustrates the progression of the annual production for the brown-field projects.

Chart 1: Brown-Field Projects – Rehabilitation, Development Phases And Production Levels, 2010-29