18 June 2013 14:52 [Source: ICIS news]
By Cuckoo James
LONDON (ICIS)--Well-established legal and infrastructure frameworks will help support Iraq's oil and petrochemical exports by ensuring stability and attracting investors, senior figures in the international energy sector said at the Iraq Petroleum 2013 conference on Tuesday.
An increase in Iraqi oil production could potentially hike the spare capacity at the disposal of the OPEC nations and change current oil pricing dynamics, the speakers said.
David Morrison, chairman of the research and consultancy group Wood Mackenzie, said: "Iraq is under explored, but a highly prospective area."
Expanding pipeline capacity is key to increasing Iraqi oil exports, he added.
Exports from an almost land-locked Iraq are mainly transported using lengthy pipelines that come under frequent attacks, including the Kirkuk-Ceyhan oil pipeline - Iraq's largest export line - that runs from Iraq to neighbouring Turkey.
The pipeline was reported to have been bombed as recently as early June by militants near the Nineveh province.
Despite having the fifth-largest proven oil reserves in the world, Iraq has failed to meet its targets to increase oil production because of political setbacks, delays in approving laws and challenges in infrastructure development.
Iraq's proven oil reserves are estimated at 141bn bbl/day as of 1 January 2013, according to the Oil and Gas Journal. Most of the reserves are in southern Iraq and in the ethnically Kurdish region in the north.
However, average crude oil production was at a mere 3m bbl/day in 2012, although Iraq has surpassed Iran as the second largest OPEC oil producer at the end of the year, according to the Energy Information Administration (EIA).
Speaking at length on the legal aspect of hiking oil production and exports, Morrison said: "The Iraq Hydrocarbon Law should be finalised."
The proposed law has been under review by the Iraqi government since 2008.
In 2012, Iraq was the sixth largest net exporter of petroleum liquids in the world with exports amounting to 2.4mn bbl/d, and with the US and India on par with each other as its largest export markets, according to Lloyd's List Intelligence and the EIA.
Iraq will need to invest in desulfurisation of crude oil refined products to meet stringent regulations in its export markets, Adnan al Janabi, chairman of the oil and gas committee, the federal Iraqi parliament said.
Exports of petrochemicals should be part of the plan as they are value-added products, Janabi said.
The hydrocarbons derivative industry has a huge potential in building the economy and creating jobs for the increasing working age population in Iraq , said Hans Nijkamp, vice president and country chairman, Shell.
In Iraq, the petrochemical sector has the potential to increase the country's overall exports, Nijkamp said.
Around 300 delegates have gathered at the conference, which opened in London on Tuesday and is being held at the Intercontinental Hotel from June 18-19.
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