Russia Plays a Huge Role in Iraq’s Oil Development Here’s Why and How
Russia has taken control of the semi-autonomous Kurdistan Region (KRI) oil sector in northern Iraq since 2017 for four key reasons: .
- KRI has significant oil and gas reserves.
- its troubled relationship with Baghdad-ruled southern Iraq would allow Russia to play the role of mediator between the two parts of the country, giving it power over both sides.
- Third, this leverage could then be used to extend Russia's hold over southern Iraq as well, which has even more oil and gas reserves. q
- Fourth, it would allow Russia to thwart any attempts by the United States and its allies to begin rebuilding their influence in the country.
This last point found further resonance after the resumption, in March, of the agreement on relations between Iran (Iraq's main regional sponsor) and Saudi Arabia, brokered by China. Specifically, a source who works closely with the European Union's energy security apparatus exclusively told OilPrice.com at the time, Iran was told by a top-ranking Kremlin official that: “Keeping the 'West out of the energy deals in Iraq – and closer to the new Iran-Saudi Arabia axis – the end of Western hegemony in the Middle East will become the decisive chapter in the definitive end of the West".
With the future of oil supplies independent of the KRI looking very precarious, Russia is moving firmly towards the latter stages of its plan for Iraq, as evidenced by serious discussions over the past two weeks to increase its presence in the fields oil companies of the country.
A sign of this comes from the fact that Russia is finally making a major increase in oil production from Iraq's supergiant West Qurna 2 oil field. This field – together with the Rumaila field – was recently cited by the Iraqi Ministry of Petroleum as vital to the country's plan to increase its oil production capacity to around 7 million barrels per day (bpd) in 2027.
West Qurna
The entire West Qurna oil field, located 65 kilometers northwest of the southern port city of Basra, has total estimated recoverable oil reserves of 43 billion barrels, making it one of the largest oil fields in the world. West Qurna 2 has estimated recoverable oil reserves of around 13 billion barrels and, like most large fields in Iraq (and Iran and Saudi Arabia), benefits from the lowest lifting costs in the world – at just $1-2 US per barrel.
The original development plan for the West Qurna 2 field was for production of 1.8 million barrels per day, but this was changed in 2013 to a three-phase plan where peak production would be 1.2 million of barrels per day. Phase 1 would add approximately 120,000 barrels per day (bpd) to the first 30,000 bpd of production from the site's Mishrif Formation. Phase 2 would add another 400,000 bpd from the full development of the Mishrif Formation. And Phase 3 would add another 650,000 bpd from the development of the deeper Yamama Formation.
The plan was blocked for a long time due to economic disputes between the Iraqi government and Lukhoil, which also included the problem of Kurdistan. Now, finally, it seems that the Russians have decided to unblock the situation and the production of West Qurna 2 has increased from 400 to 480,000 barrels per day in a few weeks, with the prospect of reaching 600,000 barrels very soon. Added to this is the mediation on Kurdish oil.
This shows how Russia, also through its independent companies, is positioning itself very well in the sector in Iraq and is controlling it, also favoring the increase in production of a country with enormous potential. This then fits into the three-way game between Russia, Iran and Saudi Arabia. The Russian hand on the Middle East is growing stronger, while the US seems to have withdrawn from the region.
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The article Russia plays a very strong role in the development of Iraqi oil Here's why and how it comes from Scenari Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-russia-gioca-un-ruolo-fortissimo-nello-sviluppo-del-petrolio-iracheno-ecco-perche-e-come/ on Thu, 17 Aug 2023 09:00:56 +0000.