Iraq's oil boon faces uphill battle

Jan. 12, 2010 at 11:40 AM
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BAGHDAD, Jan. 12 (UPI) -- Iraq is on the cusp of rivaling Saudi Arabia in terms of oil production, but logistical, political and market obstacles could present challenges, experts say.

Iraq awarded contracts to international oil companies for its nine largest fields during its second post-war auction in December. With those contracts in hand, Iraq is set to boost its oil production to more than 11 million barrels per day.

It is estimated Iraq has about 115 billion barrels of proven oil reserves, and analysts believe the country holds much more in the unexplored deserts of Anbar province.

James Placke, a Middle East expert at Cambridge Energy Research Associates, tells CNN Money the oil in place is not the problem.

"It's getting it out (of the ground) that's always been the problem," he said.

Meanwhile, the new government that emerges from March parliamentary elections could amend the December contracts or place unattractive terms on future contracts.

Even if Iraq does reach its production goals, however, quotas from the Organization of the Petroleum Exporting Countries could make it difficult for Iraq to find the oil market.

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