Iraq opens nearly 90 % of its oil reserves

Iraq, the holder of the world's third-largest oil reserves, has opened nearly 90 percent of its reserves to international oil companies for development in two major bidding rounds this year as the war-plagued country tries to raise money amid falling oil prices. Iraq, with at least 115 billion barrels in reserves, plans to add 4 million to 4.5 million barrels a day to its current 2.4 million barrels per day capacity over the next four to six years as it tries to rebuild its infrastructure and develop its economy. On Wednesday, Oil Minister Hussein al-Shahristani kicked off the country's second postwar bidding round, naming 11 oil and gas fields or groups of fields as eligible for development proposals. "We kicked off this round in response to the country's need to increase its crude production to increase its hard-currency income in light of sinking world oil prices," al-Shahristani told a news conference. Top on the list are the giant Majnoon and West Qurna Phase 2 fields, which hold reserves of at least 12 billion barrels each. The two fields currently produce far below their individual output potential of 600,000 barrels per day. Al-Shahristani said only 15 of 78 known oil and gas fields have been brought into production, and many desert areas in western and southern Iraq have yet to be explored. A drop in oil prices to under $40 per barrel from a summertime high of about $150 has hit Iraq hard; the country depends on oil revenues for nearly 95 percent of its budget. As a result, the government was forced to slash its 2009 budget from $80 billion to $67 billion and is considering a further reduction. On Wednesday, light, sweet crude for February delivery was trading electronically on the New York Mercantile Exchange at $37.96. "These are of course worrying prices not only for Iraq but also to all oil exporting countries," al-Shahristani said, adding that more cuts could be considered by OPEC when it next convenes in March. In June, Iraq opened its first postwar round of bidding for contracts to develop six major oil fields and two gas fields. Among those bidding were international energy giants Royal Dutch Shell PLC, BP PLC, ExxonMobil Corp., Chevron Corp. and Total. The companies, which are bidding on long-term service contracts, would be paid through a flat fee for their services instead of production-sharing contracts which are considered more preferable. The ministry plans to sign the contracts of the first round in mid-2009 and the second round by the end of the year, al-Shahristani said.