Translated material
Unproven reserves
Iraq announced an increase in its oil reserves by 25%
The reserves of “black gold” in Iraq are not 115 billion barrels, as expected, but 143 billion. This was announced yesterday by the country’s Oil Minister Hussein al-Shahristani. According to him, the main contribution to such a significant increase was made by the Zubair and West Qurna fields. Iraq can now claim third place in the world in terms of proven reserves, taking it away from neighboring Iran with its 137 billion barrels. However, as Vremya Novostey was told by LUKOIL, which is implementing the second phase of the West Qurna project, no additional exploration has been carried out in the area being developed by the company since January and the amount of oil has not been overestimated. Experts also expressed doubts about a one-time increase in Iraq's oil reserves by 25%.If the data presented by the country’s authorities is correct, then in terms of the volume of “black gold” reserves, Iraq is now second only to Saudi Arabia (265 billion barrels) and Venezuela, which, as a result of a revaluation in 2008, increased the wealth of its subsoil by 72%, to 172 billion barrels. To a large extent, this success, according to Mr. al-Shahristani, was ensured by foreign companies that conduct exploration and development of local deposits. Thanks to them, in particular, the true volume of Western Qurna reserves became clear. Some of the fields in this group are being developed by Exxon Mobil and Royal Dutch Shell as part of the West Qurna-1 project. The development of the remaining areas included in the West Qurna-2 project is carried out by the Norwegian Statoil and LUKOIL. Until now, the proven reserves of Qurna-1 were estimated at 21 billion barrels, Qurna-2 - at 12.9 billion. Thus, the total volume has not yet exceeded 34 billion barrels. However, as Mr. al-Shahristani reported, the deposits of this oil-bearing region turned out to be much larger - 43.3 billion barrels, which makes it the second largest in the world after the Saudi Al-Ghawar (about 71 billion barrels).
LUKOIL, the operator of the West Qurna-2 project, told Vremya Novostei that since the signing of the contract for the development of the field in January of this year, no additional assessment of reserves has been carried out. “For now, work is underway to clear the area of mines, and there is no talk of additional exploration. The start of drilling and seismic surveys is planned for next year,” the company explained. Based on this, it can be assumed that 10 billion additional barrels were found at West Qurna-1. UniCredit analyst Artem Konchin, in turn, noted that in the future, additional reserves may be discovered at Qurna-2. “For LUKOIL, the increase will be positive, even though the company does not receive the full economic benefit under the terms of the contract,” the expert believes.
Meanwhile, a sharp increase in reserves, according to analysts, may only be a way to attract additional investment in the oil industry. “It is not clear how the assessment was carried out at all. If this is an attempt to secure the highest possible quotas for itself in the future, then Baghdad risks not receiving them, because even OPEC may not believe in the adequacy of such indicators,” says Andrey Gangan, chief analyst at Kalita Finance Investment Company. Nevertheless, his colleague, head of the analytical department of the Aton Investment Company, Vyacheslav Bunkov, believes that Iraq will more than once “clarify” the data on oil reserves in order to strengthen its position in the oil cartel and interest investors. The latter is also necessary in order to ensure a level of exports that corresponds to the growing volume of production. Thus, according to experts, approximately $12 billion needs to be invested in oil transportation infrastructure alone.
The Iraqi finds are unlikely to have an impact on the general state of the market even in the medium term. “Recently, the market has not paid much attention to the real relationship between supply and demand. Even compliance with quotas by OPEC members is not given much importance,” concluded Mr. Gangan.
American oil companies are leaving Libya
Chevron and Occidental Petrolium have refused further work in Libya. This was stated by the leadership of the National Oil Corporation of Libya. The companies were among the first to enter the Libyan market in 2005, but after five years of unsuccessful searches, they decided not to renew their licenses to develop oil and gas fields. Australian Woodside Petroleum did the same, as did Liwa Energy from Abu Dhabi. As REUTERS notes, representatives of foreign businesses often face numerous obstacles in Libya from the country's leadership. In addition, renewing a license requires significant financial investments - according to the leadership of the Libyan corporation, companies that decided to continue operating in the country paid the state more than $130 million.