October 02, 2003
An oilman in Iraq

The top story in today's Chron is this interview with Philip Carroll, the senior American oil official in Iraq. It's pretty upbeat, as you would expect from a man in his position, but it demonstrates that we have only just begun to spend billions of dollars over there:

Carroll suggested that any recovery by Iraq's oil industry would take place over the long term and would require billions of dollars in foreign investment.

"Iraq's present capability, as close as I can assess it, is to produce right at or maybe a little less than 3 million," barrels per day, he said. "They are not going to be able to go above that much without significant investment."

Of that amount, he said, about 2.5 million barrels per day would be available for export.

Carroll said it is realistic to foresee a day in "a minimum of six or seven years" when, fueled by as much as $40 billion to $50 billion in additional foreign investment, Iraq could become an oil colossus exporting as much as 6 million barrels a day. Iraq's proved oil reserves are estimated at 112.5 billion barrels, second in the Middle East only to Saudi Arabia's 259 billion barrels.

"That would provide them with very large export earnings and the ability for their economy to grow rather attractively," Carroll said. "They are not going to get there in 2004 and they are not going to get there in 2005. It is going to require tens of billions to fully develop that kind of capacity."

Emphasis mine. I think we all know who is going to provide that "foreign investment". Get your checkbooks out, everyone.

Posted by Charles Kuffner on October 02, 2003 to Iraq attack | TrackBack

If Iraq opens up and holds bid rounds, I see no reason why explorationists won't be the ones making the investment.

Posted by: kevin whited on October 2, 2003 12:30 PM

Maybe, but my take on this is that the "tens of billions" is to fix the infrastructure, and that sounds like government money to me. Let's just say right now that I'm pretty skeptical.

Posted by: Charles Kuffner on October 2, 2003 1:00 PM

Chuck, that money is likely a combination of government money to establish security and basic infrastructure, and private investment for the more specific exploration, recovery and exportation costs...and it's likely low. It's more likely to be in the hundreds of billions of dollars.

The questions I have with regard to private investment are - who will get to decide the bid criteria and who will "award the contract"? The US? The US and Britain? The UN? The Iraqis...and if so, who decides which Iraqis? And where does the money raised from production go? And who controls that? Would it really be fair to "open" the process for bids, yet exclude French comapnies like Agip or TotalFinaElf?

Posted by: Patrick on October 2, 2003 2:29 PM