Iraq oil output catching up with pre-war level, despite attacks

BAGHDAD, Nov 25 (AFP) - Iraq's crude oil production is rising despite a rash of attacks on its energy infrastructure, and could equal by next March its level before the US-led invasion, a top Iraqi oil official said.

State Oil Marketing Organisation (SOMO) Director Shamkhi Faraj said oil production has reached 2.2 million barrels per day (bpd), up from almost zero when the US-led troops ended the 24-year rule of Saddam Hussein in April.

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"Hopefully, we shall keep on increasing production, our plan is to reach the pre-war sustainable production level of 2.8 million bpd by the end of March 2004, and god willing, before then," he told AFP.

Exports would rise in parallel from their current level of 1.6 million bpd to between two and 2.1 million bpd in March, he said.

Most of Iraq's output is coming from the southern oilfields which are currently producing 1.7 million bpd and providing all exports, transiting via the offshore terminal of Basra on the Gulf, he said.

Production in the northern oilfields around Kirkuk is crippled by bomb attacks on pipelines and other facilities, blamed by the US-led coalition on Saddam loyalists and Islamic militants active in the region.

Faraj said output from the north is running at 500,000 bpd, but the crude oil pumped out was mainly being reinjected into the fields after extracting the gas associated with it to supply the domestic market.

The crude is reinjected in the fields because attacks continue to target the pipelines taking it to the northern refinery of Baiji and the Turkish export terminal of Ceyhan, on the Mediterranean.

The 300,000 bpd Baiji refinery and the pipeline network in northern Iraq lie in the region which formed the power base of the toppled president.

Faraj said the oil ministry was reinforcing security on the northern pipelines, but the "task is difficult because they are cover a long distance, hundreds of kilometers (miles)."

But even if security remains poor in the north, he said output from the south "is increasingly steadily" and would allow the country to get very close to its target of 2.8 million bpd in March.

"We hope production from the south will reach 2.2 million bpd in February.

"The South Oil Company is surprising us every day, it is already producing 1.7 million bpd. We were expecting it to reach 1.5 million bpd only at the end of the year," he said.

To allow for the increased output to be exported, work has started to rehabilitate the country's second offshore export terminal, Khor al-Amaya, in the Gulf. The facility was destroyed in the 1980-1988 war with Iran.

"By the time production reaches 2.8 million bpd, we expect to be able to use Khor al-Amaya again," said the SOMO official.

A South Oil Company official said the Khor al-Amaya terminal can add an export capacity of one million bpd before end 2004.

The rehabilitation of the Iraqi oil industry is done in cooperation with Kellogg Brown and Root, a Halliburton subsidiary contracted by the US government.

Faraj said boosting Iraq's output to three million bpd, its level before the 1991 Gulf war, "would not require large investments because this was the initial capacity."

He said the ministry's plan forecasts increasing output capacity to between three and four million bpd by the end of 2005, and raising it to six million bpd by 2010.

Iraq's estimated 112.5 billion barrels of crude oil reserves are the world's second largest after Saudi Arabia.

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