UPI Energy Watch

Iraq asks for help on oil and revenue

Iraq needs help from foreign oil experts to develop its ailing oil sector, Iraqi Prime Minister Nouri al-Maliki said.

Maliki suggested that if Iraq could run a successful oil industry, then other industries, including agriculture, could also return to the country, Khaleej Times Online reports.

Iraq "is now ready to work toward increasing its oil production" because of increased security in the country, he said. However, the redevelopment as it exists now has been slow, and the country needs the money to begin to rebuild after the war.

"We are now focused on increasing oil and gas production ... so as to be able to rehabilitate industry and agriculture," Maliki said.

Some progress has been made as Iraq produced about 2.25 million barrels per day in 2008 and is now producing about 2.31 million bpd, according to Oil Minister Hussain al-Shahristani.

Still, Deputy Prime Minister Barham Saleh said he thinks the country needs a new oil policy.

"The present situation shows the need to draw up the lines of a new oil policy through cooperation between Iraqi and foreign experts in order to develop the (oil) riches," he said.

One of the problems is that oil revenues represent about 98 percent of Iraq's budget and prices have fallen to less than $50 per barrel.

In response, Maliki has called for the development of other sectors of the economy to relieve reliance on oil and called for expert assistance on oil development. Some of the other sectors to be developed include agriculture, industry, religious tourism and services.

Total, Gazprom interested in Trans-Sahara gas line

France's Total SA and Russia's OAO Gazprom have both expressed interest in the 2,734-mile Trans-Sahara gas pipeline.

The pipeline would deliver Nigerian natural gas to Europe. The goal is to make it operational by 2015, Oil and Gas Journal reports.

"Total believes this is a long-term strategic diversification for Nigeria, which is quite interesting. I take this opportunity to mention publicly that Total is ready to become involved in this project," Guy Maurice, managing director of Total Exploration and Production in Nigeria, said.

While Vladimir Ilyanin, managing director of Gazprom Nigeria, agreed, he said the company would like to see slightly higher natural gas prices before investing billions of dollars.

"We have the opportunity here to offer some solutions that we have come across," Ilyanin said. "We have experience of running similar long, large-scale projects."

The pipeline is expected to cost $12 billion and is part of Nigeria's master plan for natural gas.

The Nigerian National Petroleum Corp. will reportedly work with Sonatrach on the pipeline and is in the process of finalizing a memorandum of understanding.

The pipeline would transport about 30 billion cubic meters of natural gas per year.

Russia enters LNG market

Russia has signed its first agreement to develop a liquefied natural gas plant near Yuzhno-Sakhalinsk in far eastern Russia.

The plant will process natural gas from the Sakhalin II extraction project, which is extracting gas from several offshore fields in the Sea of Okhotsk, Asia Times Online reports.

The plant is being developed by a consortium including Gazprom with a 50 percent stake, Royal Dutch Shell with 27.5 percent and Japanese companies Mitsui and Mitsubishi with 12.5 percent and 10 percent, respectively.

The total investment is $22 billion for the project's 20-year lifetime, including gas extraction and liquefaction.

Japan will receive most of the LNG, followed by South Korea and North America.

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Closing oil prices, Feb. 27, 3 p.m., London

Brent Crude oil: $46.09

West Texas Intermediate crude oil: $44.49

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(e-mail: energy@upi.com)