Friday, Feb 18, 2011

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   By Hassan Hafidh 
   Of DOW JONES NEWSWIRES

BAGHDAD (Dow Jones)--A steady increase in crude oil exports from Iraq's northern Kurdish region is boosting the country's overall exports to 2.16 million barrels a day this month, the highest level since the U.S.-led invasion in 2003, Iraqi government and company officials said.

Exports from the semi-autonomous region resumed early February at just shy of 10,000 barrels a day and are now flowing at 75,000 barrels a day.

By the end of this month, exports from the region are expected to reach 100,000 barrels a day, and are seen increasing gradually to 200,000 barrels a day by the end of the year, according to Kurdish officials. If that level is achieved, Iraq's total oil exports would be around 2.2 million barrels a day, which is the level set by the 2011 budget.

Norway's DNO International SA (DNO.OS) said Wednesday it has boosted exports from Iraqi Kurdistan to a test level of 50,000 barrels a day from its Tawke oil field. The remaining 25,000 barrels a day should be coming from Taq Taq field, which is operated by China's Sinopec and Turkey's Genel Enerji. Taq Taq can pump as much as 50,000 barrels a day at this stage, the Kurdish officials said.

Iraq sits atop an estimated 143 billion barrels of oil, the world's third-largest proven reserves of conventional crude, but has struggled to lift output amid years of sanctions and war under Saddam Hussein, then looting, underinvestment and political gridlock after the U.S.-led invasion.

Momentum appeared to pick up earlier this year, when new Oil Minister Abdul Kareem Luabi announced production capacity hit 2.7 million barrels a day, from 2.4 million barrels a day. The record output rates have come following the conclusion in 2009 and 2010 of 12 large deals with some of the world's largest oil companies.

The increase has also come in-line with swift work at the southern Rumaila, Zubair and West Qurna Phase 1 fields, where some 300,000 barrels a day have already been added and a further 200,000 barrels a day are expected by the end of this year, officials said.

However, the central government and the KRG are still at loggerheads over scores of deals signed by the Kurds with international companies--Baghdad says they need to be approved by the federal government, while the Kurds argue they are in line with the new constitution. A resolution of this impasse is needed to boost Kurdistan's output beyond 200,000 barrels a day.

Iraqi Prime Minister Nouri al-Maliki and his deputy Hussein al-Shahristani have sent conflicting signals in recent weeks, shedding little light on terms under which oil exporters will operate in the Kurdistan region.

Also unresolved is the enactment of an Iraqi oil and gas law, which Kurdish officials say is needed to ensure long-term investment in the region. Under the current arrangement, Baghdad has agreed to compensate DNO for the costs of its exports, but not for profits. DNO must wait for a national petroleum law to be enacted to recover profits. The Kurds hope to have a law enacted by June, but past efforts have died in Iraq's parliament.

-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com

(END) Dow Jones Newswires

18-02-11 1535GMT