ISTANBUL, Turkey, July 2 (UPI) -- The cost to fix Iraq's oil sector may have doubled, or more, since the 2003 invasion, the Iraqi prime minister's top energy adviser said.
Thamir Ghadhban said the oil industry estimated Iraq needed $25 billion to increase its production from 2.6 million barrels per day to 6 million bpd. But that was before the war began, which shocked the country's oil sector that produces only 2 million bpd currently.
"As you know, the costs are much higher," Ghadhban told an audience in Istanbul, Turkey, attending Cambridge Energy Research Associates' "East Meets West: New Frontiers of Energy Security" conference.
"The favorable characteristics of Iraqi oil fields, such as their simple geology, large reserves and high production rates, make their development cost to be the cheapest in the world," Ghadhban said. But, citing OPEC President Mohamed bin Dhaen al Hamli's estimation during the conference that field development costs have increased three-fold, "then it would cost $75 billion, or $50 billion if we use a factor of two," to develop Iraq, Ghadhban said. "However, I am not sure if the rise in cost is of linear nature."
"It definitely will be a high cost to the country," he said.
Iraq's oil sales last year brought in more than $30 billion.
Iraq's oil was mismanaged by Saddam Hussein and then U.N. sanctions kept it from being modernized. The war and consequential security conundrum have both prevented investment and led to attacks on the pipelines, refineries and workers. The sector needs to be fixed, misuse mitigated and efficient, modern technology installed.
A proposed oil law that would determine the role of foreign investors, among other issues, is stuck in negotiations between the federal government -- a delegation Ghadhban leads -- and the Kurdistan Regional Government over which oil fields each controls.
The KRG wants a limited role for a national oil company.
Ghadhban said currently producing fields will see investment first, then new fields brought online, while exploration continues, "mostly at the beginning in the Kurdistan region."
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Ben Lando, UPI Energy Correspondent
