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Chapter-3

3.1 FIELDS, RESERVES AND OIL PRODUCTION OF IRAQ

Iraq oil resources play very important role in its relations with

nations in the world. It uniquely placed in the world geopolitics due to

its rich natural oil resources. The natural resources of any country very

rightly determine its role in the global power context ; subsequently it

leads the same to expose its influential nature in the arena of world

geopolitics.

In West Asian region, Iraq ranks as one of the most important

producers and exporters of oil resources. That is the reason why, all the time

countries like United States (US) have eyes on it. Iraq acquires strategic

importance in the context of international oil market due to its

predominant role in the oil production and its supply to all over the

world.

It will not be out of context here to explain the background and

recent developments of Iraqi oil industry.

Background

The Mesopotamian region became known for its remarkable

potential for oil exploration and development in the early 19th century.

The collapse of Ottoman Empire created many opportunities for those

seeking to exert economic and political influence over the area now

constituted as Iraq1, and several companies expressed their interests for

concessions.

After the discovery of oil in Iran in 1908 at Masjid Al-

Suleiman2, great interest emerged in the region as a whole, including three

primary Iraqi provinces of Mosul, Baghdad and the southern port of the

Basra. In 1911, the Turkish Petroleum Company (TPC) was formed under

63

the guiding hand of Calouste Gulbenkian, a man well known for his

strong links with the Ottoman Turkish leadership. In October 1927, TPC

discovered oil in Kirkuk field and later TPC became as the Iraq Petroleum

Company (IPC)3. The Nationalization of Iraq’s oil resources and production

was completed by 1975. From 1975 to 2009, Iraq’s oil production and

export operations were entirely state operated. However, from the early

1980’s until the toppling of Saddam Hussein’s government in 2003, the

country’s hydrocarbon infrastructure suffered from the negative effects

of war, international sanctions, a lack of investment and technology and

in some cases mismanagement. In the year 2009, according to the oil and

gas journal, Iraq has 115 billion barrels of proven oil reserves. It is the

world’s third largest proven petroleum reserves after the Saudi Arabia and

Canada. Other estimates of Iraq’s potential oil reserves vary , and the U.S

department of energy’s, Energy Information Administration (EIA) notes

that current estimates “have not been revised since 2001 and are largely

based on 2D seismic data from nearly three decades ago”. In April

2007, oil Industry consults IHS estimated that Iraq’s proven and

probable reserves equal to 116 billion barrels, with a potential additional

100 billion barrels in largely unexplored western areas. The U.S

Geological Survey’s median estimate for additional oil reserves in Iraq is

approximately 45 billion barrels. In August 2004 Iraq’s then oil Minister

Thamer-al- Ghadban stated that Iraq had “unconfirmed or potential

reserves” of 214 billion barrels. Iraq current proven reserves are

concentrated largely (65% or more) in southern Iraq, particularly in the

southern most governorate of Al-Basra (Map: 3.1). Large proven resources

also are located in the northern governorate of Al- Tamin near the

disputed city of Kirkuk.

At present, crude oil is the source of over 90% of the Iraq’s

domestic energy consumption and oil export generate over 90% of Iraq’s

government revenue. Declines in global oil prices from their 2008 high

64

and reduced oil production led Iraqi leaders to amend their 2009 and

2010 revenue and budget assumptions from projected surpluses to

projective consecutive $ 15 billion deficits. Official U.S assessments stress

that continued fluctuations in oil prices and production could jeopardize

Iraq’s fiscal stability and the sustainability of its reconstruction and

development plans, with uncertain follow on effect on stability. Current

Iraqi plans call for the expansion of oil production to the level of 4

million barrels per day (MMBD) by 2013 and then upward to 6 MMBD

by 2017. In support of those goals, Iraqi officials have opened an

international bidding process for service contracts and renegotiated a

series of Saddam era-oil production agreements, including the

transformation of a production sharing agreement into a service contract

for Ahdab oil field with China National petroleum Corporation (CNPC).

Iraq Ministry of oil Contracts

In an effort to improve the output of Iraq’s currently

producing oil fields, the Ministry of oil opened negotiations with major

international oil companies on two year technical service contract

(TSC’s), but decided in September 2008 to drop further negotiations.

Potential partners reportedly included Royal Dutch Shell, Chevron, BHP

Billiton, Anadarko, ExxonMobil, BP and total SA. Under the terms of

TSC’s, international firms would have provided technology equipment

and services to increase the total output of currently producing Iraqi

oil fields by 5,00,000 barrels per day.4 The technical contracts reportedly

were to be based on studies that international oil companies completed

for Iraqi government under the terms of existing memoranda of

understanding.

Instead, Minister Al- Shahristani has proceeded with licensing

rounds for long-term service contracts in a number of oil fields. In January

65

2008, the ministry launched a pre-qualification review process for potential

international investors. Oil companies interested in bidding on oil extraction

and service licenses issued by Iraq’s national government were required to

submit a pre-qualification form to the Ministry’s directorate of petroleum

contracts and licensing by February 18, 2008.6 In march 2008, Minister Al

–Shahristani reported that approximately 150 companies had made

submissions, and by June 2008, 35 companies had been pre-qualified to bid

for long-term service contracts.

The first bid round opened on 30 June 2009, and covered

Iraq’s main oil field at Rumaila ,Kirkuk, Zubair,West Qurna (phase-I), Bai

Hasan, and Maysan, along with natural gas fields at Akkaz and

Mansouriyah. According to Middle East Economic Digest (MEED),

although there was strong competition for phase one of West Qurna

field and southern Zubair oil field, there was just one bid each for the Bai

Hasan, Missan, Kirkuk and Akkas fields.7 Only one bid originally was

accepted by Iraqi authorities- a joint bid by British Petroleum (BP)

company and China National Petroleum Corporation (CNPC) for the

Rumaila service contract. Cabinet approval is being sought for long-term

contract absence of hydrocarbon framework law, and the cabinet reportedly

approved the Rumaila bid in July 2009, paving the way for contract

negotiations. The Federation of workers councils and Unions in Iraq are

protecting the bidding process in general and the Rumaila proposal in

particular.

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Table No. 3.1 Oil Fields for Bid in Iraq

First Bidding Round Reserves (Billion Barrels)

Rumaila 17

West Qurna, phase –I 8.7

Kirkuk 8.6

Zubair 4

Missan 2.5

Bai Hasan 2.3

First round total (Billion barrels) 43

Second Bidding Round Reserves (Billion Barrels)

West Qurna ,phase –II 12.9

Majnoon 12.6

East Baghdad 8.1

Halfaya 4.1

Gharah 0.9

Najmah 0.9

Qayarah 0.8

Kifil 0.2

West kifil 0.2

Marjan 0.2

Badra 0.1

Qamar 0.1

Gullabat 0.1

Naudoman 0.1

Second round total (Billion barrels) 41

Source: U.S Department of Energy, EIA, Country Analysis Brief: Iraq, June, 2009.

A second bidding round was scheduled for mid December

2009 or early 2010 to include eleven discovered but currently non-

producing fields, including the major fields at Halfaya, Majnoon, East

Baghdad and West Qurna (Phase- II). Interest reportedly remains high in

the proposed bidding round, although industry executives are watching

intently for signals from Baghdad about its plans to negotiate service

contract for the remaining fields from the first round, perhaps by

including them in a rescheduled second round for the an earlier date.

67

The misalignment of Iraq’s proposed compensation fees and the bids

offered by international oil companies in the first round suggested a

need for serious consultation among Iraqi officials and between them

and their prospective partners. Subsequent reported agreements with

consortia for the Rumaila and Zubair fields indicated that some parties

on both sides are willing to be flexible in the interest of reaching

agreements.

Distribution of oil fields according to Provinces

The currently producing fields (Table no.-3.2) are concentrated

in the provinces of Basra and Kirkuk. There is little production from the

other fields located in the provinces of Mesan, Baghdad, Salaheddin, Diala

and Mosul. There is also several discovered and undeveloped fields that

are scattered throughout most of the country’s provinces, except for

four where neither oil nor gas have so far been discovered.

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Table No. 3.2 Oil reserves and production from the Developed current fields

according to provinces Province No. of

fields Oil

reserves(million of barrels)

Available

production(1,000

barrels/day)

Additional production(one

thousand barrels/day)

Basra 10 61,360 1,800 1,700

Amara 3 2,650 40 100

Nasiriya - - - -

Samawa - - - -

Diwaniya - - - -

Hilla - - - -

Najaf - - - -

Karbala - - - -

Waist - - - -

Anbar - - - -

Baghdad 1 6,500 20 80

Salaheddin 1 500 25 20

Diala 1 30 10 10

Kirkuk 4 12,350 570 155

Sulaimaniya - - - -

Erbil 1 2,200 30 70

Dahook - - - -

Mosul 3 1,040 30 115

Total 24 86,630 2,520 2,640

Source: http://www.iraqrevenuewatch.org

These four provinces are Diwaniya, Babel, Anbar and Dahook shown in the

(Table no.3.3).

69

Table No. 3.3 Oil reserves and production from the Undeveloped Discovered fields

according to provinces

Province No. of fields Oil reserves

(million of barrels)

Expected

production from

New fields (1,000

barrels /day)

Basra 5 4,450 855

Amara 8 5,825 430

Nasiriya 3 5,070 490

Samawa 1 20 5

Diwaniya - - -

Najaf 1 200 20

Karbala 2 340 30

Babel - - -

Waist 3 1,350 150

Anbar - - -

Baghdad - - -

Salaheddin 4 2,225 125

Diala 7 620 115

Kirkuk 2 1,125 85

Sulaimaniya - - -

Erbil 4 960 275

Dahook - - -

Mosul 7 2,470 190

Total undeveloped

fields

47 24,680 2,770

Grand Total 71 111,310 5,410

Source: http://www.iraqrevenuewatch.org

As in shown in the (Table no. 3.4) Basra owns the greatest oil field in the

country. It has a total of 15 fields, 10 which are producing while 5 are

awaiting development and production. The rock beds of those fields

contain oil reserves of some 65 billion barrels, which represent 59% of

total Iraqi oil resources.

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Table No. 3.4 Total oil reserves currently known according to provinces

Province No. of fields Total oil reserves

(million of barrels)

Percentage of total

(%)

Basra 15 65,810 59.1

Amara 11 8,500 7.6

Nasiriya 3 5,070 4.5

Samawa 1 20 -

Diwaniya - - -

Najaf 1 200 0.2

Karbala 2 340 0.3

Babel - - -

Waist 3 1,350 1.2

Anbar - - -

Baghdad 1 6,500 5.8

Salaheddin 5 2,725 2.5

Diala 8 650 0.6

Kirkuk 6 13,475 12.1

Sulaimaniya - - -

Erbil 5 3,160 2.9

Dahook - - -

Mosul 10 3,510 3.2

Total 71 111,310 100.0

Source: http://www.iraqrevenuewatch.org

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Furthermore, there are 11 fields in Mesan , of which 3 are

productive and 8 are unproductive, comprising some 8.5 billion barrels

of oil reserves. If we add the reserves of Nasiriya field, which are about 5

billion barrels, the existing reserves in these three provinces, Basra, Mesan,

and Nasiriya, will be about 79.4 billion barrels, representing 71% of all the

Iraqi reserves. Kirkuk province has 6 oil fields, consisting of 4 that are

productive, and 2 that are unproductive and awaiting development.

Existing oil reserves in that province are estimated at about 13.5 billion

barrels, including 12.3 billion barrels in the currents fields, and the

remaining in underdeveloped fields. This means that oil reserves in

Kirkuk represent about 12% of total reserves, broken down at 7.5% in the

Kirkuk field and 4.5% in the other province fields. It should be pointed

out that production at the Kirkuk field started in 1934 and its accumulated

production until now has attained 62% of the original reserves existing in

the field8. That means that this super giant is at the final stages of its life

and that its current daily production capacity, amounting to about

470,000 barrels daily ,will plunge to about half of that ten years from

now, and so less than 100,000 barrels a day twenty five years from now.

It is worth pointing out that the region of Kurdistan , in its

current borders, possesses 5 oil fields, including the Khurmala dome,

which is northern extension of Kirkuk field. This field contain about 3.1

billion barrels, with daily production capacity estimated at 375,000 barrels a

day. That means that Kurdistan’s currently known oil reserves represent

about 3% of the total. Additionally, the Sulaimaniya province possesses two

large gas fields Chemchemal and Kormor.

It should be mentioned that exploration operation are still under

way in Iraq. When they are completed, the provinces oil and gas wealth

distribution map may radically change. However, the position of Basra will

most likely remain at the forefront. In addition, there are studies indicate

that the provinces in which oil has not been discovered until now have

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solid oil and gas prospects, especially in the case of the two provinces

of Anbar and Mosul.

It can be seen in the enclosed (Map: 3.2) that there are several

joint fields and current fields. Among the most important fields are the

following:

Al-Fakkah Field

The Al- Fakkah field also known as Jabel Al- Fauqi. Its

geographical coordinates are 32°02’N to 47°37’ E. It is an onshore oilfield

located in the Maysan region in southern Iraq and Khuzestan province of

Iran. This oil field produced 50,000 barrels per day prior to the 2003 Gulf

War. Basically the Al-Fakkah field is part of Maysan oilfield complex,

which reserves of about 2.5 billion barrels.9 The oil field is considered

shared but an area of dispute between Iran and Iraq. Iraq unsuccessfully

put the oil field up for bidding in 2009.10 On December 18, 2009, about

a dozen Iranian troops crossed three hundred yards (a unit of linear

measure) into Iraq and seized oil well no. 4 in the Fakkah field, raising

the Iranian flag on site. The incident infuriated Iraq who demanded that

Iran should withdraw. While the Fakkah oil field is considered shared, Iraq

considers well no. 4 as theirs. The well was drilled 1979 and initially

produced 3,000 barrels per day, however production on the well ceased in

1980 due to Iran–Iraq war. On December 21st, after a series of political

negotiations, Iran withdrew from oil well number 4.11

Az- Zubair field

The Az- Zubair field, also known Az- Zubayr, is an oil field

located in southern Iraq, west of Basra. Its geographical coordinates are

30°21’ N to 47°36’ E. It is one of the largest field in the world and was

discovered in 1949. It has 4.5 billion barrels of proven reserves and

currently produces 195 thousand barrels per day but in the next year under

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the field’s expansion programme, production is expected to reach a plateau

level of 1.125 million barrels per day.12 The development license has been

awarded to consortium led by Eni (32.81%) with occidental petroleum

corporation (23.44%), Korea gas corporation (18.78%) and Iraq state run

Missan oil company (25%).13

Baba Gurgur

The Baba Gurgur oil field is a large oil field near the city of

Kirkuk which was the first to discovered in northern Iraq in 1927. Its

geographical coordinates are 35°31’58’’ N to 44°20’09’’ E. It was

considered the largest oil field in the World until the discovery of the

Ghawar field in Saudi Arabia in the 1950’s. Baba Gurgur is located 16

kilometres northwest of Arrapha and is famous for its Eternal fire

located at the middle of its oil fields. The Eternal fire of Baba Gurgur

(Father of fire in Kurdish) is a name used describe the flames of the

Baba Gurgur oil field. It is estimated that the burning flames have been

around for more than 4,000 years .The Eternal fire was first discovered

by Herodotus and also has been described by other ancient Greek

authors such as Plutarch. Many believe the Eternal fire to be the same

fiery furnace in the book of Daniel, Chapter 3 , in the Tanakh (old

testament) into which King Nebuchadnezzar (c 630-562 BC), King of

Babylon threw 3 Jews for refusing to worship his golden idol.14 It has

a significant symbolic value for residents of Kirkuk. The burning

flames are the results of an emission of natural gas through cracks in

the Baba Gurgur areas rocks.

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East Baghdad Field

East Baghdad field is a group of oil fields, located east of Baghdad,

Iraq. Its geographical coordinates are 330 21’ 8” N to 440 38’ 53” N. The

East Baghdad oil field is proven to hold 8 billion barrels a day. The oil

field was discovered in 1976 and 11 km wide 64 km long.15 Basically

this field lies in the two provinces of Baghdad and Salaheddin, and

probably extends Southward within the province of Wasit. Hence, it

should be jointly managed by the provinces of both Baghdad and

Salaheddin, and perhaps that of Wasit too. In December 2009, despite

previous negotiations with Japan’s petroleum exploration company

(JAPEX), there were no bids to work on the oil field. Iraq’s Ministry of

oil will likely work the site instead.16

Halfaya Field

Halfaya oil is an onshore oilfield. Its geographical coordinates are

31049’39” N to 47025’20” E. It is lactated east of Amarah, Iraq. Halfaya is

proven to hold 4.1 billion barrels of recoverable reserves and has

production potential 200- 530,000 barrels per day but only produces

3,000 barrels per day currently.17 In December 2009, the China National

Petroleum Corporation was awarded a 50% stake in the development

of the field and France’s total S.A along with Malaysia’s Petronas were

awarded a 25% stake. The consortium plans production at 353, 000 barrels

a day.18

Kirkuk Field

This is the super giant field comprises three domes that extend

from the southeast to the northwest by about 100 km . Two main domes

(Baba and Avana) are located in Kirkuk, while the third one (Khurmala) is

located within Erbil and currently produces an average of 30,000

barrels daily. It was discovered in 1927. The Kirkuk oil field was brought

75

into use by the Iraq petroleum Company (IPC) in 1934 and has ever

since remained the basis of northern Iraqi oil production with over ten

billion barrels (1.6 km3) of proven remaining oil reserves as of 1998.

After the seven decades of operation, Kirkuk still produces up to one

million barrels a day , almost half of all Iraqi oil exports. Oil from the

Kirkuk oilfield is exported through the Kirkuk-Ceyhan oil pipeline,

which runs to the Turkish port Ceyhan on the Mediterranean sea. Some

analysts believe that poor reservoir management practices during the

Saddam Hussein years may have seriously, and even permanently,

damaged Kirkuk’s oil field. One example showed an estimated 1.5

billion barrels of excess fuel oil being re-injected. Other problems

include refinery residue and gas- stripped oil. Fuel oil re-injected has

increased oil viscosity at Kirkuk making it more difficult and expensive

to get the oil out of the ground.19

Majnoon Oil Field

This is a super giant oilfield located 60 km from the Basra, Basra

governorate in southern Iraq.20 Majnoon is one of the richest oil fields in

the world with an estimated 23-25 billion and proven reserves of 12.6

billion of oil in place. The field was named Majnoon which means

crazy in Arabic in reference to excessive amount of oil in a dense area.21

This field was discovered by Braspetro, a Brazilian in 1975, in a

shallow upper cretaceous formation.22 Development came to a halt in

1980 during the engineering phase of the project, due to Iraq-Iran war,

particularly operation Kheibar. At the time, Braspetro had finished drilling

of 20 wells and pressed 14 drilling rigs into service. In the course of the

war, Iran occupied and sabotaged the area. After the war southern oil

company of Iraq restarted the production. In 1990’s total S.A of France

negotiated a development contract with Saddam Hussein but was

unable to sign the deal due to United Nations Sanctions imposed on

Iraq. The deal was eventually annulled by Hussein in 2002. Due to 2003

76

second Gulf War, the production was reduced to 46,000 barrels per day.23

In 2007, total and chevron signed an agreement with Iraqi government to

explore Majnoon field.24

On December 11, 2009 the Iraqi government awarded a licence to

a joint venture from Royal Dutch Shell and Petronas to take over operations

at Majnoon oil field, and triple production from the estimated reserves

nearly 12.6 billion barrels at a fee rate of $ 1.39 barrel.25 The consortium

was awarded the content out of 44 international companies, participating

in the auction, with China National Petroleum corporation (CNPC),

ExxonMobil , Sinochem corporation, total specially bidding of Majnoon

field.26 The finalist alliance of CNPC and total offering $ 1.75/ barrel lost

the bid. The deal intends a 20 year service and development of the field.27

The contract was approved by council of Ministers of Iraq on 5th January,

2010.

Majnoon Island

Majnoon Island is an Island in the southern Iraq near Al- Qurnah,

located in a centre for oil production of the Majnoon oil field. The area was

built out of sand dunes and mud to create pathways for oil pipelines. Before

Gulf War28, roughly a sixth of Iraq’s oil reserves, some seven million

barrels, passed through this Island. Production quickly recovered after the

site was a centre of fighting in the Iran-Iraq war , particularly operation

Kheibar in 1984. However, post the imposition if United Nations Sanctions

and the 2003 Iraq war, production has presently reduced to 46,000 barrels

per day.

In December 2009, the Iraqi government awarded a license to a

joint venture from Royal Dutch Shell and petronas to take over

operations at Majnoon oilfield, and triple production from the estimated

reserves of 13 billion barrels at a fee rate of $1.39 per barrel.29 Joint

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venture company is 25% held by the Iraqi Ministry of oil , 45% by shell

and 30% by petronas.

Nahr Umr Field

This field lies in the province of Basra. Its geographical coordinates

are 30052’17” N to 47039’02” E. This oilfield discovered in 1949 by

British Petroleum.30 Its production began a long time ago from the layer

called Nahr Omar’s formation, with modest rates about 1,000 barrels a

day. However, the main reservoirs of that field, which are those of

Yamama, Zubair and Mishrif, are still undeveloped. Once developed, a

production capacity of 400-500 thousand barrels per day could be obtain.

Once more, it is seen that this field could be classified as a current field

because it has been producing for a long period of time; and yet

because its main reservoirs are still undeveloped, it may also be argued

that it is a new field.

Rumaila Field

Rumaila field is an oil field located in Kuwait and southern Iraq.

The dispute between Iraq and Kuwait over allegedly slant–drilling in the

field was one of reasons for Iraq’s invasion of Kuwait in 1990.31 This

giant oil field was discovered by British petroleum in 1953. Under the

Saddam Hussein, it was nationalized by Iraq. Since then, this massive oil

field remains under Iraqi and Kuwaiti control. Estimated to contain some

15% of Iraq’s oil reserves, British Petroleum (BP) and China National

Petroleum Corporation (CNPC) won a 20 year service contract to develop

Rumaila at the end of June 2009. It is the most productive oil field in Iraq;

the field was a great hope for cash from future oil exports in order to dreams

of modernization with new foreign machinery. This oil field represented

their path to economic independence. But this field was in critical situation

during the Gulf War. Iraq after accusing Kuwait of side- drilling launched

an attack on Kuwait soils that were allegedly drilling Iraqi oil.

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West Qurna Field

West Qurna is one of the Iraq’s largest oilfields located North of

Rumaila field, west of Basra. West Qurna is believed to hold 21 billion

barrels of recoverable reserves, making it the second largest field in the

world after Saudi Arabia’s Gharwar oil field.32 The field was closed to

western firms due to year–long sanctions.33 It is currently partially

producing at about 300,000 barrels day compared with 800,000 barrels a

day when development is completed. Thus there are those who may

argue that this field belongs to the current fields, while others would

argue that it belongs to the new fields.

OIL RESERVES IN IRAQ

Oil reserves are the estimated of crude oil claimed to be recoverable

under existing economic and operating conditions. Many oil producing

nations do not reveal their reservoirs engineering field data, and instead

provide unsubstantiated claims for their oil reserves. Iraq is the world 13th

largest oil producer in 2008, and has the world third largest proven

petroleum reserves after Saudi Arabia and Canada. According to recent

Geological surveys and seismic data Iraq has the largest oil reserves in

the world.34 Just a fraction of Iraq’s known fields are in development,

and Iraq may be one of the few places left where vast reserves, proven

and unknown , have barely been exploited. Iraq’s energy sector is heavily

based upon oil, with approximately 94% of its energy needs meet with

petroleum.

According to oil and gas journal, Iraq proven oil reserves are 115

billion barrels, (fig.no.3.1) although these statistics have not been revised

since 2001 and are largely based on 2D seismic data from nearly ago.

International Geologists and Consultants have estimated that unexplored

territory may certain vastly largely reserves.35 The Geologists and

Consultant have estimated that relatively unexplored territory in the western

79

and southern deserts may certain an estimated additional 45 to 100 billion

barrels (bbl) of recoverable oil. While international Iraqi estimates have

ranged into the hundreds of billions of barrels of additional oil, the seismic

data under review by a host of international firms seem to be pointing to

more conservative, but significant increases. A major challenge to Iraq’s

development of the oil sector is that reserves are not evenly divided across

sectarian-demographic lines. Most known hydro-carbon resources are

concentrated in the Shiite areas of the South (Map: 3.3) and the ethnically

Kurdish north, with few resources in control of the Sunni minority. Passage

of the proposed hydro-carbon law, which would provide a legal framework

for investment in the hydrocarbon sector, remains a main policy objective.

The majority of the known oil and gas reserves in Iraq come from a

belt that runs along the eastern edge of the country. Iraq has 9 fields that are

considered “Super Giants” (over 5 billion barrels) as well as 22 known

“Giant field” (over 1 billion barrels). According to independent consults,

the cluster of Supergiant fields of south-eastern Iraq forms the largest

known concentration of such fields in the world and accounts for 70 to 80

percent of the country’s proven oil reserves. An estimated 20 percent of oil

reserves are in the north of Iraq, near Kirkuk, Mosul and Khanaqin. Control

over rights to reserves is a source of controversy between the ethnic Kurds

and other groups in the area.

80

Table No. 3.5 Iraq Crude Oil reserves (Billion Barrels)

Year Reserves Year Reserves Year Reserves

1980 31 1990 100 2000 112.5

1981 30 1991 100 2001 112.5

1982 29.7 1992 100 2002 112.5

1983 41 1993 100 2003 112.5

1984 43 1994 100 2004 115

1985 44.11 1995 100 2005 115

1986 47.1 1996 100 2006 115

1987 100 1997 112 2007 115

1988 100 1998 112.5 2008 115

1989 100 1999 112.5 2009 115

Source: http://www.tonto.eia.doe.gov.

Figure No. 3.1

The Department of Energy (DOE) estimates that the cost of bringing

oil production online in Iraq is among the world’s lowest about $3-$5

billion per MMBD of output.36 Such potential productivity reiterated by

DOE in subsequent country reports suggests that Iraq offers one of the

world’s best long term petroleum prospects with substantial output

potentially growing from relatively few, high yield wells. In comparison to

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a mature oil producing province such as United State of America, where

521,000 wells produce almost 5.8 MMBD37, Iraqi output comes from only

1,600 wells potentially able to produce almost 3 MMBD. The comparison

(U.S. wells average about 10 billion barrel per day, while Iraqi wells can

average several thousand) points up the profile nature of Iraq’s

hydrocarbon-bearing geology, and points towards easily realized

production increases with the application of current reservoir

management techniques the drilling of additional wells, and infrastructure

improvements.

Over 93% on undeveloped reserves are assigned to 19 fields only,

which are estimated to contain more than 500 mn barrels of reserves each

(fig.no.3.2).The fields offered for development are from this group. These

fields generally extend over large areas ranging from some 50 km to 500

km. Fields in the south of Iraq generally consist of simple anticlines with

hardly any structural complexities. Hence the change of drilling off-

structure wells or dry holes is remote. The east Baghdad, situated in the

centre is however, characterized by the presence of multiple faults.

82

Table No. 3.6

Distribution of Reserves: Developed and Undeveloped fields Size (mnb) Distribution of reserves

(Developed fields) Distribution of reserved

(Undeveloped fields)

>5000 68.7 60.4

1000-5000 23.4 26

500-1000 6.7 6.9

< 500 1.2 6.7

Source: MEES, Vol. 47, No.8, 23rd February, 2004

Figure No. 3.2

83

IRAQ OIL PRODUCTION

Oil exploration and production in Iraq began in the 1920s under

the terms of a wide-ranging concession granted to a consortium of

international oil companies known as the Turkish Petroleum Company

and later as the Iraq Petroleum Company. The nationalization of Iraq’s oil

resources and production was complete by 1975. From 1975 to 2003, Iraq’s

oil production and export operations were entirely state operated. However,

from the early 1980s until the toppling of Saddam Hussein’s government

in 2003, the country’s hydrocarbon infrastructure suffered from the

negative effects of war, international sanctions, a lack of investment and

technology and, in some cases mismanagement.38

In 2008, Iraq’s crude oil production under control of the regional

state owned oil companies averaged 2.4 million barrels per day (MMBD),

up from its 2007 production of 2.1 MMBD. However, this still below its

pre- war production capacity level 2.8 MMBD in 2003. About two-thirds of

production comes from the southern field, with the remainder from

north-central field near Kirkuk. At present, the majority of Iraq oil

production comes from just three giant fields: North and South Rumaila and

Kirkuk (Map: 3.4). The Rumaila fields operated by Iraqi Parastatal south

oil company, along with a ring of nearly a dozen smaller fields ,including

Subha, Luhais, West Qurna and Az- Zubair, have producing 1.5 to 1.9

MMBD, close to pre-war levels. Controversially, average production at

Kirkuk and the northern fields of around 200,000 barrels per day (bbl /d) is

only fraction of the pre-war peak of around 680,000 bbl/d, due to

reservoirs damage from gas and water injection as well as shut in export

routes. In May 2007, The Iraqi Minister of oil (MoO) reported that total

production from the northern fields was 206,000 bbl /d , all of which

went to domestic compensation.

84

The table no. 3.7 represents reported installed oil production

capacity in Iraq , all of which is not online – effective capacity or actual

production, is subject to change based on the security situation.

Table No. 3.7

Usable oil production capacity in Iraq SOUTERN FIELDS Estimated current

capacity(million bbl/d) 2007

Estimated pre –war capacity

(million bbl/d) 2003

Estimated reserves (billion barrels)

Rumaila north 500,000 500,000 10

Rumaila south 800,000 800,000 7

West qurna 180,000 250,000 15-21

Az-zubair 230,000 230,000 5

Missan(inc. Buzurgan, Jabal faqi,

Abu Ghraib )

100,000 100,000 3

Majnoon 50,000 50,000 20

Luhais 50,000 50,000 2

Southern sub-total (million bbl/d)

1.9 2.0 -

NORTHERN FIELDS*

Estimated current capacity (million

bbl/d) 2007

Estimated pre –war capacity

(million bbl/d) 2003

Estimated reserves (billion barrels)

Kirkuk 250000 (600,000-700,000)

700,000 10

Bai Hasan [50,000-100,000] 125,000 2

Jambur [75,000] 75,000 1

Khabbaz [25,000] 30,000 <1

Ajil [25,000] 25,000 <1

East Baghdad 0 50,000 8

Anil Zalah /Butmah [10,000] 10,000 <1

Sujiya (other minor field)

10,000 10,000 <1

Northern sub-total (million bbl/d)

0.3 1.0 -

TOTAL (million bbl/d)

2.2 3.0 -

Source: EIA, ITAO, Media Reports, Government of Iraq, Ministry of oil. *Most of the production shut in due to limited export routes/limited refining

capacity.

Currently, the Ministry of oil has central control over oil and gas

production and development in all but the Kurdish territory through its

three operating entities, the North oil company (NOC), the South oil

company (SOC), and Missan oil company (MOC), which was split off

from the south oil company in 2008. According to the NOC’s website

85

,their concession and jurisdiction extends from the Turkish borders in

the north to 32.5 degrees latitudes (about 100 miles south of Baghdad),

and from Iranian borders in the east to Syrian and Jordanian borders in

the west. The company’s geographical operation area spans the following

governorates: Tamim (Kirkuk), Nineveh Irbil, Baghdad, Diyala and part of

Babil to Hilla and Waist to Kut. The remainder falls under the

jurisdiction of the SOC and MOC, and through smaller in geographical

size, includes the majority of proven reserves. MOC’s oil fields hold an

estimated 30 billion barrels of reserves. They include Amara, Halfaya,

Huwaiza, Noor, Rifaee, Dijaila, Kumit and East Rafidain.

Iraq resource base is considered the second largest in the world,

second to the Saudi Arabia, and its oil export policy has been a critical

element in setting international oil supply and pricing for over 30 years.

Iraq has generated virtually all of its export earnings through its production

of crude oil. Over the many years of production, the trend line has moved in

one direction and then another. For purposes of placing production in the

immediate pre-Gulf War period (table no. 3.8) in context, it should be noted

that informed authorities report production, essentially by IPC in 1954 to

have run at a rate of approximately 30 million tons annually, or 600,000

bbl/d.39 In 1955, that number increase to 32.7 million tons for the year, or

650,000 bbl/d.40 The 1956 Suez crisis and Arab-Israel war affected

production negatively for both that year and the next. The year 1956 saw

production of 30.6 million tons, or the equivalent of basically 600,000+

bbl/d.41 and 1957 registered a serious decline to 21.36 million tons or

427,200 bbl/d.42 by 1958 the upward production trend had resumed, with

34.93 million tons, or 698,000 bbl/d produced.43 In 1959 there were 40.9

million tons of crude production by IPC in Iraq, the equivalent of 818,000

bbl/d 44 , obviously, improved recovery technology, increased production

activity, and the sense within IPC that pressure on various fronts was

building from the Iraqi government resulted in jumping in 1960 to 47.5

86

million tons or 950,000 bbl/d.45 with the adaptation of law no. 80 in 1961,

production over the preceding year increased only marginally to about 49

million tons, or 980,000 bbl/d, with the same being the case for 1962.46 If

one compares the 980,000 bbl/d production rate in the immediate wake of

the 1961 nationalization with the production rate generated by the activities

of IPC and Iraq National Oil Company (INOC) and its international oil

company collaborators at the time of the adoption of law no.69, the second

and more comprehensive nationalization measure adopted by Iraq 1971-

1972, it is clear that the initial move toward nationalization spurred

production considerably. Information indicates that the 1971, rate of

production was 83.7 million tons for the year, or basically 1.6 million

barrels per day (MMBD).47 In 1972 production at the 1.5 MMBD rate.48

And by 1979, Iraqi crude oil production had increased to a level of 3.5

MMBD.49

87

Table No. 3.8 Iraq Crude Oil Production (Pre-Gulf War period)

Year Production

(mmbd) Year

Production

(mmbd) Year

Production

(mmbd) Year

Production

(mmbd) Year

Production

(mmbd)

1928 0.022 1964 1.26 1971 1.69 1978 2.56 1985 1.43

1940 0.055 1965 1.32 1972 1.47 1979 3.48 1986 1.69

1950 0.14 1966 1.39 1973 2.02 1980 2.51 1987 2.08

1960 0.97 1967 1.23 1974 1.97 1981 1.00 1988 2.69

1961 1.01 1968 1.50 1975 2.26 1982 1.01 1989 2.90

1962 1.01 1969 1.52 1976 2.42 1983 1.01 1990 2.04

1963 1.16 1970 1.55 1977 2.32 1984 1.21 ----- -----

Source: EIA, U.S energy information Administration and also available at

http://www.eia.doe.gov/aer/txt/ptb1105.htm.

Figure No. 3.3

The Iraq-Iran war broke out in September 1980, and its impact

on crude oil production was far reaching which dropped to 2.51 MMBD in

1980.50 By 1981- 1983, production had dropped roughly 1.01 MMBD

(figure no.3.3), climbing again in 1985 to the vicinity of 1.43 MMBD,

88

and by 1988 to approximately 2.69 MMBD . Following the conclusion of

the Iraq- Iran war in 1988 and up until the time of Saddam Hussein’s

invasion of Kuwait in the summer of 1990, Iraqi production of crude oil

had climbed from 2.90 MMBD in 1989 to earlier 1979 high level 3.48

MMBD by 1990.The invasion of Kuwait and the international community’s

response had serious repercussions for Iraqi crude oil production.

Production for 1991 to 1992 period dropped to less than 500,000 bbl/d (see

table no. 3.9). After the Gulf war first, not only impact of the military action

on Iraq’s oil fields, but the United Nations (UN) imposed economic

sanctions kept Iraqi crude oil production in the 500,000 to 600,000 bbl/d

range from 1991 to 1996.51

Table No. 3.9 Iraq oil production during the period (1990-2003)

Year Production

(mmbd)

Year Production

(mmbd)

Year Production

(mmbd)

1990 2.04 1995 .56 2000 2.57

1991 .31 1996 .58 2001 2.39

1992 .43 1997 1.16 2002 2.02

1993 .51 1998 2.15 2003 1.31

1994 .55 1999 2.51 ---- ---

Source: Energy information Administration (EIA)

89

Figure No. 3.4

The UN developed ‘oil for food program’, designed to permit limited and

regulated Iraqi oil exports sales to recommence, facilitated a climb in

production to roughly 2.39 MMBD by 2001 (figure no.3.4). production

ramped up rapidly following the program’s announcement in 1996, so

that by the first eight months of 1998 crude oil production reached 2.15

MMBD. Production stayed solid right up to the time of the March 2003

outbreak of hostilities in the Gulf War second. As with the Gulf War first,

Table No. 3.10 Iraq oil production after Gulf war Second, (2003)

Year 2004 2005 2006 2007 2008

Production (million barrels

per day)

2.01 1.88 2.00 2.09 2.36

Source: Energy information Administration (EIA)

90

Figure No. 3.5

the effect of the second Gulf War on the oil fields were serious. These

have been further compounded by the continuing sectarian and ethnic

turmoil besting the nation. Reports of Iraq crude oil production from 2006

indicate that it came in at 2.00 MMBD (figure no.3.5) more than half a

million barrels per day short of pre-war production. In 2007 estimates

suggested a production rate basically in the same vicinity. However, U.S

Department of state reports from the Iraq transition office suggested

that production actually ended the year at 2.3 to 2.4MMBD.52 Interestingly,

the historical pattern suggests that domestic Iraqi consumption has

remained essentially steady at about 250,000 to 500,000 bbl/d, leaving

production amounts above that levels to be available for export to the

international market.53 And furthermore, of total crude oil production,

about two thirds has come from the southern oil field and one third

from the north. Indeed, it appears that in 2007, somewhere between 1.5

and 1.9 MMBD come from the north and south Rumaila field, in the

southern Iraq, and only about 200,000 bbl/d come from the Kirkuk field

in the country’s north. It has been suggested that, prior to Gulf War

second , as much 680,000 bbl/d was coming from the Kirkuk field.54

The drop-off in northern Iraq production can be somewhat attributed to

91

the number of pipeline and oil facility attacks in that area . However, in

a media report from early summer 2008, there were indications from

the Iraqi oil ministry that attacks in the area had been significantly

reduced , allowing production and consequent shipments by pipeline to

the world market terminals in Turkey to be increased to as 450,000

bbl/d.55

3.2 OIL RESOURCES OF OTHER GULF COUNTRIES

The world wide economy is built upon a petroleum foundation,

with hydrocarbon based energy resources forming the backbone of

worldwide transformation, transit and power generation. As such a serious

study of resources availability and security is a crucial component of

any forward looking economic or security analysis for individual

countries and the world at large.

West Asia has over half of the world proven oil reserves

(Map: 3.5), and remains the centre of gravity in the global oil market. It

is well established that West Asia oil production dominates worldwide

crude oil markets. What may less well known is that, according to

industry projections, this region will continue to grow in strategic

importance over the next several decades. There is no doubt that the

importance of the region is poised to grow. Major oil reserves and producer

country are Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates (UAE),

Oman, Qatar, and Bahrain. Saudi Arabia is the world largest oil reserves,

producer and exporter.

92

Table No. 3.11 World oil reserves by Regions (2007)

Regions % of Reserves

Middle East 56%

North America 16%

Africa 9%

Central and South America 8%

Eurasia 7%

Asia& Oceania 3%

Europe 1%

World Total 100%

Source: US Energy information Administration, 2007

Figure No. 3.6

In the above figure (3.6) we see that most of the World’s oil

reserves are located in West Asia. However, most of West Asia energy

reserves and production are concentrated in the Gulf region. The WANA

region as a whole may have more than 65 percent of the world’s proven

93

oil reserves and 35 percent of its gas reserves, but over 94 percent of

these oil reserves are in the Gulf.

In addition, Gulf countries also normally maintain nearly a 90

percent share of the world’s surplus oil production capacity, although the

Iraq war has reduced excess world oil production capacity all in the Gulf

region.

In 2002, eight Gulf countries (Bahrain, Iran, Iraq, Kuwait, Oman,

Qatar,Saudi Arabia, and the United arab Emirates) produced about 25

percent of the of the world’s oil, and Gulf countries had estimated net oil

exports of 15.5 MMBD. Saudi Arabia exported the most, with an estimated

7.0 MMBD (45 percent of the total). Iran had estimated net exports of

around 2.3 MMBD (15 percent), followed by the United Arab emirates (2.1

MMBD- 13 percent), Kuwait (1 MMBD- 5 percent), and Bahrain (0.01

MMBD- 0.1 percent). Gross oil imports to the Organization of Economic

Cooperation and Development (OECD) countries from Persian Gulf

countries averaged about 10.6 MMBD or some 27 percent of the OECD’s

total gross oil imports.

Bahrain

Bahrain is composed of a group of small islands in the energy

rich persian Gulf. The country economy is highly dependent on oil sector,

with oil revenues amounting to about two-thirds of total goverment

revenues. While Bahrain is a net exporter of oil, it is the smallest West

Asian oil producer by volume, and unlike other Gulf states, Bahrain exports

refined petroleum product rather than crude oil. Domestically, the vast

majority of Bahrain total energy consumption comes from natural gas, with

the remainder supplied by oil. Hydrocarbons also provide the foundation

for the Bahrain’s two major industries refining and aluminium smelting.

The country only refinery, Sitra, is located the south of Manama and has a

capacity of 248,900 bbl/d. The Sitra refinery was built in 1936, and has

94

since undergone several modernizations. Bahrain is a net exporter of oil,

Bahrain exports much of oil in the form of refined petroleum products

rather than crude oil. Bahrain’s proven oil reserves stood at 125 million

barrels as of January 200856, all of which are located in the Awali field

(Map: 3.6). In addition to what is produced in its territory, Bahrain and

Saudi Arabia share the 300,000 barrels per day (bbl/d) of oil production

from the offshore Abu Saafa field.

Table No. 3.12 Bahrain Crude oil proved Reserves and Production

Year Reserves(Billi

on barrels) Production (1,000 b/d)

Year Reserves(Billi

on barrels) Production (1,000 b/d)

1980 0.24 48.2 1995 0.21 145.4

1981 0.225 45.2 1996 0.21 174.3

1982 0.209 43.9 1997 0.21 182.4

1983 0.197 41.4 1998 0.21 183.1

1984 0.185 41.2 1999 0.16 176.4

1985 0.17 41.8 2000 0.14811 180.3

1986 0.155 42.0 2001 0.14811 182.4

1987 0.14 42.3 2002 0.12456 187.3

1988 0.14055 43.0 2003 0.12456 188.6

1989 0.126 107.7 2004 0.12456 187.1

1990 0.11171 108.3 2005 0.12456 186.5

1991 0.09746 107.7 2006 0.12456 183.3

1992 0.08349 123.5 2007 0.12456 184.7

1993 0.06958 141.2 2008 0.12456 184.5

1994 0.06958 137.9 ------ ------- -------

Source: EIA, OPEC Annual Statistical Bulletin 1998, 2005 &2008.

95

Figure No. 3.7

In 2007, Bahrain produced an estimated 49,000 bbl/d of total oil

liquid, of which 35,000 bbl/d was crude oil, 11,000 bbl/d was natural gas

liquids, and 3,000 bbl/d was refinery gain, this amount excludes joint

production Abu Saafa field, of which Bahrain share is about 150,000

bbl/d, during 2007, Bahrain consumed an estimated 35,000 bbl/d of oil.57

Kuwait

Kuwait is another Gulf state that plays a critical role in any

projection of the world’s future oil supplies. Kuwait economy is heavily

dependent on oil export revenue which account for roughly 90 percent of

total export earnings. Kuwait channels around 10 percent of its oil revenue

in the “Future Generation Fund” for the day when oil income runs out.58

96

According to oil and gas journal, as of January 2010 Kuwait

territorial boundaries contained an estimated 101.5 billion barrels (bbl) of

proven oil reserves, roughly 8 percent of the world total.59 Most of the

Kuwait’s oil reserves are located south of Kuwait city (Map: 3.7). The 70

billion barrels Greater Burgan area, which comprises three structures:

Burgan, Magwa, and Ahmadi fields, is widely considered the world’s

second largest oil field, surpassed only by Saudi Arabia’s Ghawar field.

Table No. 3.13 Kuwait Crude oil proved Reserves and Production

Year Reserves(Billion barrels)

Production (1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 68.53 1663.7 1995 96.5 2006.6

1981 67.93 1129.7 1996 96.5 2005.6

1982 67.73 824.3 1997 96.5 2007.1

1983 67.15 1054.1 1998 96.5 2051.5

1984 66.7475 1163 1999 96.5 1872.7

1985 92.71 936.3 2000 96.5 1996.1

1986 92.464 1174.3 2001 96.5 1947

1987 94.5221 971.6 2002 96.5 1745.9

1988 95.525 1190.1 2003 96.5 2107.6

1989 94.525 1277.5 2004 99 2288.7

1990 97.125 858.6 2005 101.5 2573.4

1991 97.025 185.3 2006 104 2664.5

1992 96.5 1057.2 2007 101.5 2574.5

1993 96.5 1881.8 2008 104 2676.0

1994 96.5 2006.6 ----- ------ -----

Source: EIA, OPEC Annual Statistical Bulletin 1998, 2005 &2008.

97

Figure No. 3.8

Producing oil since the 1950’s, Greater Burgan generally producers

lighter crudes with API’s in the 280-360 range and has a production

capacity of 1.6 million bbl/d. The south Magwa field discovered in 1984

is estimated to hold at least 25 billion bbl of light crude. Other fields

surrounding the Grater Burgan area include Umm Gudair, Minagish and

Abdaliya. Umm Gudair and Minagish produce heavier crude oil, with

gravities in the 220-260 API range and have a combined production

capacity of 200,000 bbl per day. In January 2003, water injection began at

Minagish to enhance oil recovery and offset natural gas declines in

production. Table no. 3.13 shows the Kuwait reserves and production of

crude oil.

Iran

According to oil and gas journal as of January 2010, Iran has an

estimated 137.6 billion barrels of proven oil reserves, or roughly 10

percent of the world’s total reserves. Iran has 40 producing fields (27

onshore and 13 offshore). The majority of crude oil reserves located in

the south western Khuzestan region near the Iraqi border (Map: 3.8).

98

Iran crude oil generally medium in sulphur content and in the 280-350 API

range. In 2008, Iran exported about 2.4 million bbl/d of oil, primarily to

Asia and Organization for Economic Co-operation and Development

(OCED) Europe countries making it the fourth largest exporter in the

world .

Table No. 3.14 Iran Crude oil Reserves and production

Year Reserves(Billion barrels)

Production (1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 58 1467.4 1995 89.25 3595

1981 57.5 1262.8 1996 88.2 3596

1982 57 2420.6 1997 93 3603.4

1983 55.308 2441.7 1998 93 3714

1984 51 2032.4 1999 89.7 3439

1985 48.5 2192.3 2000 89.7 3661.3

1986 47.876 2037.1 2001 89.7 3572

1987 48.8 2297.6 2002 89.7 3248

1988 92.85 2478.5 2003 89.7 3741.6

1989 92.85 2814.1 2004 125.8 3834.2

1990 92.86 3135.3 2005 125.8 4091.5

1991 92.85 3406.8 2006 132.46 4072.6

1992 92.86 3431.6 2007 136.27 4030.7

1993 92.86 3425.2 2008 138.4 4055.7

1994 92.86 3596 ----- ------- ------

Source: EIA, OPEC Annual Statistical Bulletin 1998, 2005 &2008.

99

Figure No. 3.9

Production

In 2008 Iran produced approximately 4.2 million barrels per day

(bbl/d) of the total liquids of which roughly 3.9 million bbl/d was crude

oil, equal to about 5 percent of global production. For the most of 2009

it is estimated that Iran’s crude oil production was approximately 3.8

million bbl/d almost 500,000 bbl/d above Iran’s estimated 3.3 million

bbl/d OPEC quota. Iran’s 2009 crude oil production capacity estimated to

be 3.9 million bbl/d. Iran produce over 5 million bbl/d of oil in 1978,

but since the 1979 revolution a combination of war, limited investment,

sanctions and high rate of natural decline in Iran’s mature oil fields

have prevented a return to such production levels. Iran’s fields have a

natural annual decline rate estimated at 8 percent onshore and 11

percent offshore, with recovery rates at 20-25 percent. An estimated 4,

00,000-7, 00,000 bbl/d crude oil production is lost annually due to decline

nature of fields.60

100

Oman

According to oil and gas journal, estimated proven oil reserves in

Oman stood at 5.5 billion barrels (Map: 3.9) as of January 2009.61

Oman’s oil production increased slightly in 2008, after a fairly constant

Table No. 3.15 Oman crude oil Reserves and Production

Year Reserves(Billion barrels)

Production (1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 2.4 282.9 1995 4.828 848.1

1981 2.34 328.0 1996 5.138 882.6

1982 2.57 336.0 1997 5.138 899.6

1983 2.73 389.0 1998 5.238 899.5

1984 2.79 416.0 1999 5.238 899.7

1985 3.5 498.0 2000 5.238 891.2

1986 4 559.7 2001 5.506 882.6

1987 4.032 582.0 2002 5.506 825.2

1988 4.012 619.0 2003 5.506 759.5

1989 4.07116 641.0 2004 5.506 725.2

1990 4.25 685.3 2005 5.506 710.3

1991 4.3 708.0 2006 5.506 687.1

1992 4.25 739.8 2007 5.5 646.4

1993 4.483 779.7 2008 5.5 664.4

1994 4.7 809.6 ------ ----- ----

Source: EIA, OPEC Annual Statistical Bulletin 1998, 2005 &2008.

Figure No. 3.10

101

state of decline from the total liquid peak of 970,000 barrels per day

(bbl/d) in 2000. Oman produces an estimated 760,000(bbl/d) of total oil

liquid in 2008, about 6 percent more than 2007 levels. Of 2008’s output

roughly 669,000 bbl/d was crude oil, 88,000 bbl/d was lease condensate,

and the remainder consider of natural gas plant liquids. Though Oman

is experiencing success with its Enhanced Oil Recovery (EOR) projects,

according to Energy information Administration (EIA) forecasts Omani

oil production to remain near 2008 levels through 2010, as increased

production from EOR projects roughly matches declining producing

maturing field. EOR projects are the primary reason for Oman’s production

increase in 2008. Currently underway, the Mukhaizna EOR project,

operated by the occidental Petroleum and UAE’s Mubadala, began

steam-flood operation in 2008. The EOR project has proven successful in

raising Mukhaizna production from10,000 bbl/d in 2006 to approximately

50,000 bbl/d in 2008.

Qatar

Qatari liquids are generally lighter and sweeter than typical West

Asian output. Gravity ranges from 300 API for Al-shaheen to 580 API for

north field condensate and sulphur content ranges from 2.15 to 0.22%

respectively.62 Qatar two important oil fields, one is Al-Shaheen oil field

which lies to the north-east of Qatar near the border with Iran in the Persian

Gulf63 (Map: 3.10). In 2006 Al-Shaheen’s production of 240,000 bbl/d

accounted for a significant portion of Qatar total production of 815,000

bbl/d. A development plan reached between Maersk oil Qatar (MOQ) and

Qatar petroleum (QP) in 2005 calling for an increase in field production to

525,000 bbl/d by late 2009.

102

Table No. 3.16 Qatar oil Reserves and Production

Year Reserves(Billion barrels)

Production(1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 3.76 471.1 1995 3.7 389.8

1981 3.585 415.2 1996 3.7 393.1

1982 3.434 332.0 1997 3.7 405.0

1983 3.425 269.0 1998 3.7 618.1

1984 3.33 325.3 1999 3.7 608.5

1985 3.35 289.3 2000 3.7 648.2

1986 3.3 305.7 2001 13.157 632.9

1987 3.154 218.9 2002 15.207 568.9

1988 3.15 228.0 2003 15.207 676.0

1989 3.15 320.2 2004 15.207 755.3

1990 4.5 405.6 2005 15.207 765.9

1991 4.5 391.2 2006 15.207 802.9

1992 3.729 423.2 2007 15.207 845.3

1993 3.729 390.3 2008 15.207 842.8

1994 3.729 378.7 ------ ----- ----

Source: EIA, OPEC Annual Statistical Bulletin 1999, 2005 &2008

103

Figure No. 3.11

This increase expected to account for the majority of growth in

Qatar’s petroleum output this time.64Another oil field of Qatar is Dukhan, it

is large petroleum producing field extending over an area of approximately

80 km in Qatar. The first oil drilled in 1939 and first export of petroleum

from Dukhan went out in 1949. The field produces up to 335,000 barrels of

crude oil per day. Table no. 3.16 indicates the Qatar’s oil reserves and

production.

Saudi Arabia

Saudi Arabia is one of the largest and most powerful states in the

Gulf.65 It is biggest oil producer and exporter in the World.66 According to

the oil and gas Journal, Saudi Arabia contain approximately 264 billion

barrels of proven oil reserves (including 2.5 billion barrels in the Saudi-

Kuwaiti shared “Neutral Zone”67), It is also claimed that it had a total of

700 billion barrels of “discovered reserves” and 200 billion barrels of

“undiscovered reserves” and projected that its discovered volume of oil

initially in place would reach 700 billion barrels by 2025. Although Saudi

Arabia has around 100 major oil and gas fields (and more than 1500 wells),

(Map: 3.11), over half of its reserves are contain in only eight fields,

104

including the giant 1,260 square mile Ghawar field. It is the world’s largest

oil field with estimated remaining reserves 70 billion barrels. The Ghawar

field (onshore) alone has more proven oil reserves than all but six other

countries. Another fields are Safaniya (offshore), It is third largest oil field

in term of production in 2007, but production declined in 2008 with the

drop in global oil demand, and the other oil fields are Khurais(onshore),

Qatif (onshore), Shaybah (onshore), Zuluf (offshore), Abqaiq (onshore).

Production

Saudi Arabia maintains the world’s largest crude oil production

capacity, estimated by U.S. Energy Information Administration (EIA) to be

around 11 million barrels per day, at midyear of 2009. In 2005, Saudi

Arabia Ministry of Petroleum and mineral resources announced the details

of a plan to increase this capacity up to12.5 million bbl/d by 2009. Although

the oil price collapse the end of 2008 led to delays in net capacity additions.

For 2008, EIA estimates that Saudi Arabia produced on average 10.8

million bbl/d of total oil, comprising crude oil, lease condensate, natural gas

liquids and other liquids (including half of the Saudi-Kuwaiti neutral zone’s

6,00,000bbl/d) see (Map: 3.12). In addition to 9.3 million bbl/d of crude oil,

Saudi Arabia produce around 1.5 million bbl/d of natural liquid gas (NGLs)

and other liquid, which are not to subject to OPEC quotas. Saudi Arabia, a

leading world producer of NGLs, has experienced a rise in demand for

NGLs from developing countries, including India (The leading export

destination), where it is used for cooking and transportation. Table no. 3.17

shows the reserves as well as production records.

105

Table No. 3.17 Saudi Arabia oil Reserves and Production

Year Reserves(Billion barrels)

Production (1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 166.48 9900.5 1995 261.203 8023.4

1981 168.03 9808.0 1996 261.203 8102.3

1982 167.85 6483.0 1997 261.5 8011.7

1983 165.32 4539.4 1998 261.5 8280.2

1984 168.8475 4079.1 1999 261.5 7564.7

1985 171.71 3175 2000 263.5 8094.5

1986 171.49 4784.2 2001 261.7 7888.9

1987 169.18 3975.2 2002 261.75 7093.1

1988 169.585 5100.1 2003 261.8 8410.3

1989 172.575 5064.5 2004 261.9 8897.0

1990 257.559 6412.5 2005 261.9 9353.0

1991 260.004 8117.8 2006 266.81 9207.9

1992 260.342 8331.7 2007 262.3 8816.0

1993 260.342 8047.7 2008 266.751 9198.0

1994 261.203 8049.0 ------ ----- ----

Source: EIA, OPEC Annual Statistical Bulletin 1999, 2005 &2008

Figure No. 3.12

106

United Arab Emirates (UAE)

The UAE is a federation of seven Emirates- Abu Dhabi, Dubai,

Sharjah, Ajman, Fujairah, Ras-al- Khaimah and Umm- al-Qaiwai. Political

power is concentrated in Abu Dhabi, which controls the majority of the

UAE’s economic and resource wealth68 (Map: 3.13). Abu Dhabi crudes

are generally light and sweet by West Asia’s standards - gravity ranges

from 340 API for upper Zakum to 36.80 API for lower Zakum to 40.40

API for Murban.69 According to oil and gas Journal , the UAE’s proven

oil reserves were 97.8 billion barrels as of January, 2009. Abu Dhabi

leads the other emirates with 92.2 billion barrels followed by Dubai with

4 billion barrels, Sharjah with 1.5 billion barrels and Ras-al- Khaimah

with 100 million barrels. UAE crude oil streams are a light and sweet

composite. In 2008, the UAE produced 3 million barrels per day of total

oil liquids, of which 2.57 bbl/d was crude oil and 356,000 bbl/d was

natural gas liquids. The UAE’s domestic oil consumption averaged

only 525,000 bbl/d in 2008, and the majority of the oil production was

exported to the Asian countries. In the first 3 quarters of 2009, the UAE

produced an average of 2.2 million bbl/d of crude following a decision by

OPEC to cut production targets in the late 2008.70 However, UAE is a

mature oil market, with limited recent exploration success. Table no.

3.18 explains the UAE reserves as well as production data.

107

Table No. 3.18 United Arab Emirates oil Reserves and Production

Year Reserves(Billion barrels)

Production (1,000 b/d)

Year Reserves(Billion barrels)

Production (1,000 b/d)

1980 29.4113 1701.9 1995 98.1 2148.0

1981 30.41 1502.3 1996 98.1 2161.3

1982 32.176 1248.8 1997 97.8 2160.7

1983 32.354 1149.0 1998 97.8 2244.1

1984 32.34 1069.0 1999 97.8 2048.8

1985 32.49 1069.1 2000 97.8 2174.7

1986 32.99 1128.6 2001 97.8 2115.2

1987 33.05 1242.3 2002 97.8 1900.3

1988 98.105 1323.5 2003 97.8 2248.0

1989 98.105 1593.0 2004 97.8 2343.6

1990 98.105 1762.6 2005 97.8 2378.0

1991 98.1 2027.4 2006 97.8 2568.0

1992 98.1 2235.7 2007 97.8 2529.0

1993 98.1 2159.3 2008 97.8 2572.2

1994 98.1 2166.5 ------ ----- ------

Source: EIA, OPEC Annual Statistical Bulletin 1999, 2005 &2008

Figure No. 3.13

108

3.3 GULF OIL EXPORTS

Oil is important resource of the Gulf region. The Gulf region

basically consists of eight countries namely Bahrain, Iran, Iraq, Kuwait,

Oman, Qatar, Saudi Arabia and United Arab Emirates. Among them

Saudi Arabia is a largest producer as well as the largest oil exporter in

the world. According to OPEC Annual Statistical Bulletin, 2008, it exported

7,321.7 thousand barrels per day.71 Following are the details of the Gulf

exporting countries.

Iran

Iran is a major energy exporter in the Gulf region whose production

and export capabilities have been sharply affected by the Iranian

Revolution, the hostage crisis with the United States that followed, the

Iran–Iraq War of 1980-1988, and U.S sanctions that seek to block U.S

and foreign investment in Iran energy sector.

109

Table No. 3.19 Iran oil Exports and Values of Petroleum exports

Year

Oil

exports

(1,000

b/d)

Value of

exports

(Million

US Dollar)

Year

Oil

exports

(1,000

b/d)

Value of

exports

(Million

US Dollar)

1980 796.7 11,693 1995 2621.0 14,973

1981 714.6 10,047 1996 2630.0 19,441

1982 1623.2 18,690 1997 2587.0 15,553

1983 1718.7 20,273 1998 2512.0 10,048

1984 1521.8 15,713 1999 2291.0 16,098

1985 1568.3 13,012 2000 2492.2 25,443

1986 1454.0 5,900 2001 2184.6 21,420

1987 1710.0 9,400 2002 2093.6 19,219

1988 1696.0 8,419 2003 2396.3 26,124

1989 2120.0 11,315 2004 2684.1 34,289

1990 2220.0 16,831 2005 2394.5 53,219

1991 2420.0 15,276 2006 2377.2 59,131

1992 2528.0 15,184 2007 2466.8 64,901

1993 2600.0 12,773 2008 2438.1 88,918

1994 2625.0 13,576 ------ ----- -----

Source: OPEC Annual Statistical Bulletin 1999, 2005 &2008, Vienna,

Austria.

Figure No. 3.14

110

Iran, a member of the organization of the Petroleum Exporting countries

(OPEC), ranks among the world’s top three holders of both proven oil

and natural gas reserves. Iran is OPEC’s second largest producer and

exporter after Saudi Arabia, and in 2008 was fourth–largest exporter of

crude oil globally after Saudi Arabia, Russia, and United Arab Emirates. In

2008, Iran exported 2438.1 thousand barrels per day of petroleum (figure

no. 3.14). Iranian heavy crude oil is Iran’s largest crude export followed by

Iranian light. In 2008, Iran’s net oil export revenues amounted to

approximately $73 billion. Oil exports provide approximately half of

Iran’s government revenues, while crude oil and its derivatives account

for nearly 80% of Iran’s total exports.

The above (table no. 3.19) explains the rate of oil export and value of

petroleum exports. The exporting rate is always increasing during the

period between 1980 to 2008 from 796.7 to 2438.1 thousand barrels per

day(1,000 b/d). On the other hand the value of petroleum exports

fluctuated during the period between 1980 to 1988 due to Iran –Iraq war.

However, after war it again started showing upward movement. On the eve

of the first Gulf war, bulk of Iran’s oil were destined to Western

Europe, Asia and Pacific regions. Eastern Europe and the Latin America

were also important destinations of Iran’s oil export. In Asia Pacific region,

India, Japan and China were the major countries for Iranian export.

Following (table no. 3.20) focuses on top Iranian exports destinations.

111

Table No. 3.20 Top Iranian Petroleum Exports Destinations (2008)

Country Exports (Million bbl/d) Japan 520

China 430

India 410

South Korea 210

Italy 160

Spain 140

Greece 110

France 90

South Africa 90

Other 440

Total Exports 2,600 Source: U.S, EIA and also see Global Trade Atlas.

Iraq

Iraq exported over 1.8 million bbl/d of crude oil in 2008.72 About

1.5 million bbl/d of this comes from Iraq’s Persian Gulf port of Basra, with

the rest exported via the Iraqi – Turkey pipeline in the north. The majority

of oil exports go to refineries in Asia, including china and India. Before the

Iran- Iraq war, Iraq was going through a period of ‘never had it so good’;

with years of sustained economic growth, the building of its infrastructure

and a rapid and unparalleled rise in oil exports and revenues (see table

no- 3.21 &3.22). Iraq’s oil sector has suffered over the past several decades

from sanctions and wars. Within the days of the war, many Iraqi refineries

loading facilities and pumping stations were put out of action and thus

Iraq was forced to suspend virtually all its oil exports.

112

Table No. 3.21 Iraq oil Exports and Values of Petroleum exports

Year Oil exports (1,000 b/d)

Value of exports (Million

US Dollar)

Year Oil exports (1,000 b/d)

Value of exports

(Million US Dollar)

1975 2058.8 8,227 1992 60.7 482

1976 2241.1 9,201 1993 59.2 425

1977 2167.1 9,560 1994 60.0 421

1978 2384.4 10,913 1995 63.5 461

1979 3275.3 21,382 1996 88.1 680

1980 2482.0 26,096 1997 746.6 4,280

1981 872.0 10,039 1998 1417.6 5,111

1982 846.0 9,933 1999 2130.9 12,104

1983 702.0 7,816 2000 2039.8 19,771

1984 867.0 8,863 2001 1710.2 15,685

1985 1085.4 10,097 2002 1494.6 12,593

1986 1393.5 6,905 2003 388.6 7,519

1987 1717.0 9,416 2004 1450.0 17,751

1988 2095.0 9,312 2005 1472.2 22,950

1989 2260.0 11,876 2006 1467.8 29,500

1990 1596.0 9,594 2007 1643.0 37,300

1991 39.0 351 2008 1855.2 58,200

Source: OPEC Annual Statistical Bulletin 1987, 1999, 2005 &2008,

Vienna, Austria.

Figure No. 3.15

113

Table No. 3.22

Oil revenue of Iraq 1980-1988 ($ billion)

1980 1981 1982 1983 1984 1985 1986 1987 1988

26.0 10.4 10.2 9.7 11.2 12.5 7.0 11.3 11.0

Source: Survey of economic and social development in ESCWA region in

1980’s.

The significant decline in oil exports along with value of exports

during the first and the second Gulf War’s has been shown in the (table

no. 3.21). The oil exports of Iraq sharply declined from 2058.8 (1,000 b/d)

in 1975 to 872.0 (1,000 b/d) in 1981(figure no.3.15). Similarly value of

petroleum exports also went down during Iran –Iraq war. The decline in the

oil exports resulted in a massive reduction in oil revenues and foreign

exchanges. As can be noted, given the serious damage to oil exports

facilities, the revenue generated by petroleum exports fell drastically. The

value of petroleum exports fell from $ 26,096 million in 1980 to $ 10,039

million in 1981 and to $ 6,905 million in 1986 respectively.

The 1990/1991 Iraq–Kuwait crisis and the most recent war in

March/ April 2003, also seriously disrupted Iraq’s export facilities. Prior to

the Kuwait war, Iraq production capacity was around 3.1 million barrels a

day. In 1989 the Iraq exported 2260.0 (1,000 b/d) of oil which went down to

39.0 (1,000 b/d) in 1991. On the other hand value of petroleum exports also

declined. It fell down from $ 11,876 million in 1989 to $ 461 million

in1995. During the second Gulf War the rate of Iraqi oil exports and value

of petroleum exports sharply declined. Crude oil exports have fallen from a

post- war high of around 2.0 million barrels per day in 2004, to an average

of 1.5 million barrels per day in 2006. Geographically, Western Europe,

Eastern Europe and Latin America were important destinations of Iraq’s oil

export before the Iraq invasion of Kuwait.

114

Table No. 3.23 Iraq Crude oil Export by Destination (2008) Regions Exports (in percentage)

Western hemisphere 41%

Asia 34%

Europe 24%

Africa 1%

Total 100%

Source: U.S, EIA and also see Global Trade Atlas.

Figure No. 3.16

The above pie-chart shows the percentage of Iraqi crude oil export by

destination in 2008.

Kuwait

Kuwait is one of the world’s top exporters of oil, with about 2.4

million barrels per day exported in 2008.73 Kuwait economy is heavily

dependent on oil exports revenues which account for roughly 90 percent of

total export earnings. In 1980 Kuwait exported 1296.5 (1,000 b/d) as

115

shown in the (figure no. 3.17). And it sharply declined in 1981 due to Iran-

Iraq war. At the time of Iraq- Kuwait crisis, oil export of Kuwait was 85

(1,000 b/d). Similarly the value of petroleum exports in 1980 was 18,935

million US dollar and again it suddenly fell from $ 18,935 million in 1980

to $ 874 million in 1991 due to Iraq’s occupation. Prior to the invasion it

was selling oil products of 450,000 barrels per day from its downstream

operations. Kuwait’s three domestic refineries have a combined capacity of

Table No. 3.24 Kuwait Oil Exports and Values of Petroleum exports

Year Oil exports (1,000 b/d)

Value of exports

(Million US Dollar)

Year Oil exports (1,000 b/d)

Value of exports

(Million US Dollar)

1980 1296.5 18,935 1995 1186.4 12,054

1981 813.8 14,229 1996 1224.2 14,132

1982 368.8 9,066 1997 1134.2 13,468

1983 544.4 10,069 1998 1190.0 8,472

1984 658.0 10,996 1999 948.2 11,026

1985 475.9 9,451 2000 1230.7 18,185

1986 756.0 6,378 2001 1214.1 14,980

1987 607.0 7,523 2002 1138.0 14,060

1988 698.0 6,840 2003 1242.9 19,005

1989 850.0 10,432 2004 1414.9 26,675

1990 645.0 6,385 2005 1650.8 42,441

1991 85.0 874 2006 1723.4 53,178

1992 695.6 6,221 2007 1612.9 60,019

1993 1440.0 9,711 2008 1738.5 84,438

1994 1263.5 10,459 ------ ------- ------

Source: OPEC Annual Statistical Bulletin 1999, 2005 &2008, Vienna,

Austria.

roughly 936,000 b/d. The supreme petroleum council oversee Kuwait’s oil

sector and set oil policy. The Kuwait petroleum council (KPC) manages

domestic and foreign oil investment. Most Kuwait’s crude oil is sold on

term contracts, with the price of Kuwait crude oil tied to Saudi Arabian

Medium (for Western customers) and a monthly average of Dubai and

Oman crudes (for Asian buyers).

116

Figure No. 3.17

According to oil and gas journal, as of January 2010 Kuwait’s territorial

boundaries contained an estimated 101.5 billion barrels of proven oil

reserves roughly 8 percent of the world total. The partitioned Neutral

Zone, which Kuwait shares 50-50 with Saudi Arabia, holds an additional 5

billion barrels of reserves to 104 billion barrels. During the eight years Iran-

Iraq war, though Kuwait was not directly involved in the war, the close

proximity to the war zone adversely affected the oil sector. Thus in the

eighties Kuwait’s economy for most part was under recessionary spell.

According to Energy Information Administration (EIA), Kuwait’s total

exports of crude oil and refined products reached approximately 2.4

million barrels per day in 2008. Mina-al- Ahmadi is the country’s main

port for the export of crude oil. Kuwait also has operational oil exports

Terminals at Mina–Abdullah, Shuaiba, and at Mina Saud. To handle

increased production generated by project Kuwait a new terminal is planned

for construction on Bubiyan Island.

117

Table No. 3.25 Kuwait top petroleum exports destination (2008)

Country Exports (Million bbl/d)

Japan 430

South Korea 390

India 270

United states 210

Taiwan 180

Singapore 150

China 120

Other 630

Total exports 2,400 Source: U.S, EIA and also see Global Trade Atlas.

Saudi Arabia

According to EIA estimates, Saudi Arabia contains 264.2 billion

barrels of proven oil reserves, or more than one - quarter of the world’s

total. It enjoys a unique position in the world market. It is the largest

producer as well as largest exporter in the world. Saudi Arabia is the pivotal

oil exporter in the Gulf, the West Asia and the World. During 1980 Saudi

Arabia exports was 9223.2 (1,000 b/d) which sharply declined to 9017.9

(1,000 b/d) in 1981(figure no.3.18). Table no. 3.26 shows the oil exports

and value of oil exports of Saudi Arabia from 1980 to 2008. The reason for

variations in oil exports and value of oil exports may be attributed to

temporary disruptions caused by internal political change and the long

term Iran-Iraq war and the closing of the Strait of Hormuz.74 We may

say that Saudi Arabia is the largest exporter because of high production

and maintains the oil demand. In 1983 the bulk of Saudi oil was imported

by the Asian countries. Japan was the largest importer of Saudi oil 1,035.5

(1,000 b/d) followed by United States 344.2 (1,000 b/d), France 280.9

(1,000 b/d), and Italy 240.7 (1,000 b/d).

118

In 2008 oil export of Saudi Arabia to Asia and Pacific region 4281.7

(1,000 b/d) followed by North America 1618.3 (1,000 b/d), Western

Europe 852.0 (1,000 b/d) ,West Asia 302.0 (1,000 b/d), Africa 204.7 (1,000

b/d) and Latin America 63.1 (1,000 b/d).

Table No. 3.26 Saudi Arabia Oil Exports and Values of Petroleum exports

Year Oil exports

(1,000 b/d)

Value of

exports

(Million US

Dollar)

Year Oil exports

(1,000 b/d)

Value of

exports

(Million US

Dollar)

1980 9223.2 1,01,421 1995 6290.8 43,547

1981 9017.9 1,11,546 1996 6109.3 54,272

1982 5639.4 73,263 1997 6184.5 53,343

1983 3920.8 44,829 1998 6390.4 32,569

1984 3186.9 36,282 1999 5719.7 44,880

1985 2150.7 25,930 2000 6253.1 70,866

1986 3265.8 18,060 2001 6035.9 59,788

1987 2416.5 20,427 2002 5284.6 63,815

1988 3030.1 20,205 2003 6522.9 82,271

1989 3335.5 24,095 2004 6813.1 110,896

1990 4499.8 40,129 2005 7208.9 161,784

1991 6526.3 43,607 2006 7029.4 188,468

1992 6581.9 46,527 2007 6962.1 206,480

1993 6292.9 38,621 2008 7321.7 283,215

1994 6233.6 38,138 ------ ------- ------

Source: OPEC Annual Statistical Bulletin 1999, 2005 &2008, Vienna,

Austria.

119

Figure No. 3.18

Qatar

The state of Qatar lies on a mitten-shaped peninsula midway down

the east coast of the Arabian Peninsula. Qatar economy depends almost on

oil and gas revenues which account for roughly 89 percent of its export

earnings and 72 -75 percent of its government revenues. Most of

Qatar’s heavy industrial projects are tied closely to its petroleum sector.

They include a refinery with 50,000-60,000 barrels per day capacity. In

1980 Qatar’s exports was 465.7 (1,000 b/d) and it continuous witnessed

declining trend,(figure no.3.19) with some exception , due to Iran –Iraq

war and Iraq–Kuwait crisis. According to OPEC Annual Statistical Bulletin

Qatar oil export increased from 391(1,000 b/d) in 1981 to 703.1 (1,000 b/d)

in 2008 (table no. 3.27). Similarly the value of petroleum exports during the

period between 1980-1990 registered variations. The major destination of

Qatar oil exports are Asia and pacific region, Western Europe and Latin

America.

120

Table No. 3.27

Qatar Oil Exports and Values of Petroleum exports Year Oil exports

(1,000 b/d) Value of exports

(Million US Dollar)

Year Oil exports (1,000 b/d)

Value of exports

(Million US Dollar)

1980 465.7 5,372 1995 333.0 2,987

1981 391.0 5,496 1996 367.0 3,489

1982 322.8 4,214 1997 401.5 3,744

1983 279.5 2,993 1998 572.4 3,357

1984 324.2 4,386 1999 580.5 4,775

1985 280.0 3,068 2000 617.6 7,834

1986 297.0 1,720 2001 605.5 6,964

1987 214.0 1,829 2002 567.8 6,885

1988 226.0 1,709 2003 540.7 8,814

1989 320.0 1,955 2004 542.7 11,694

1990 347.8 3,273 2005 677.3 17,585

1991 336.6 2,828 2006 620.3 23,350

1992 362.3 2,870 2007 615.1 29,130

1993 340.6 2,811 2008 703.1 38,950

1994 322.6 2,623 ------ ------- -------

Source: OPEC Annual Statistical Bulletin 1999, 2005 & 2008, Vienna,

Austria.

121

Figure No. 3.19

United Arab Emirates (UAE)

The UAE is an important oil exporting country of the Gulf. The

UAE does, however, have some political problems and tensions in dealing

with the management of its oil resources. Under the UAE’s constitution,

each Emirate controls its own oil production and resource development.

The UAE still treats oil and gas as state industries.75 The UAE is a mature

oil market; with limited recent exploration success. It is one of the important

oil producers of the world.

In 1980 total daily oil export of the UAE was 1697.3 (1,000 b/d)

(figure no.3.20). But the pace of oil export could not be maintained due

to political instability caused by Iran-Iraq war. The pace of oil export

also effected the value of oil export of the UAE during the same period

, showing 25.96 percent decline. Major export destinations of the UAE’s

oil export are Asia and pacific regions, Western Europe and North America.

However in 2008 the exported 2.52 million bbl/d,76 mostly to Asian

countries , with over 40 percent going to Japan.

122

Table No.3.28 United Arab Emirates Oil Exports and Values of Petroleum exports Year Oil exports

(1,000 b/d) Value of exports

(Million US Dollar)

Year Oil exports (1,000 b/d)

Value of exports

(Million US Dollar)

1980 1697.3 19,390 1995 1925.0 12,822

1981 1439.0 18,761 1996 1943.2 14,980

1982 1167.0 15,956 1997 1949.0 15,269

1983 1077.3 13,016 1998 2039.0 11,131

1984 1036.7 12,037 1999 1919.0 15,021

1985 977.7 10,896 2000 1814.9 26,148

1986 1127.8 6,865 2001 1786.7 23,909

1987 1239.3 7,900 2002 1614.0 22,806

1988 1321.5 7,627 2003 2048.0 29,183

1989 1589.0 10,215 2004 2172.0 38,801

1990 1761.6 14,846 2005 2195.0 55,079

1991 2024.4 14,356 2006 2420.0 70,100

1992 2060.0 14,251 2007 2342.7 84,390

1993 1970.0 12,118 2008 2334.4 102,500

1994 1955.0 11,683 ------ ------- -------

Source: OPEC Annual Statistical Bulletin 1999, 2005 & 2008, Vienna,

Austria.

123

Figure No. 3.20

Oman

Oman’s oil and gas exports play a major role in future global energy

balances.77 Oman reserves relatively small. According to oil and gas

journal, estimated proven oil reserves in Oman stood at 5.5 billion

barrels (bbl) as of January, 2009 or only 0.5 percent of the world total.

Oman is not a member of the Organization of the Petroleum Exporting

Countries (OPEC), though it is a significant oil exporter. More than 90

percent oil production is exported. In 1980 Oman’s oil exports was

averaged 277.8 (1,000 b/d) and it reached a peak of 643.1 (1,000 b/d) in

1991 (figure no.21). Table no. 3.29 exhibits trend of crude oil exports of

Oman. In 1990, the majority of Oman’s oil exports were destined for the

Far East market ; Japan, the republic of Korea (South Korea), Singapore,

China, Taiwan, Thailand, and the Philippines, received 85 percent of total

Oman’s crude oil exports in 1990. Japan accounted for 40 percent of total

exports, South Korea for 26 percent, Singapore for 7 percent and less than 7

percent of crude oil exports were destined for the United States market.

During 2008, Oman’s net oil exports estimated at 680 thousand barrels per

day.78

124

Table No. 3.29 Oman Oil Exports and Values of Petroleum exports

Year Oil exports

(1,000 b/d)

Value of

exports

(Billion

US

Dollar)

Year Oil exports

(1,000 b/d)

Value of

exports

(Billion

US

Dollar)

1980 277.8 3.3 1988 578.3 n/a*

1981 328.4 4.4 1989 590.8 n/a*

1982 325.1 4.1 1990 628.0 n/a*

1983 351.1 4.2 1991 643.1 n/a*

1984 368.6 3.9 1992 689.2 n/a*

1985 450.5 4.7 1993 731.6 n/a*

1986 513.1 2.0 1994 780.5 n/a*

1987 539.4 n/a* 1995 832.6 n/a*

Source: Data is completed by various issues of OPEC Annual statistical

bulletin and OAPEC Secretary General thirteenth Annual Report, 1986.

*Data not available.

125

Figure No. 3.21

Bahrain

Bahrain ( Arabic for “two sea”) is the main island of a group of

33 small low-lying islands, also called Bahrain, which is the smallest of

the 16 West Asian states.79 Bahrain exports much of its oil in the form of

refined petroleum products rather than crude oil. Table no. 3.30 illustrates

the Bahrain’s exports refined product between 1980 and 1993. Although it

is a member of Organization of Arab Petroleum Exporting Countries

(OAPEC) but the quantum of oil export is very low. Its oil exports averaged

31(1,000 b/d) in 1991, 30(1,000 b/d) in 1992, 31(1,000 b/d) in 1993 and 30

(1,000 b/d) in 1994.80 And the oil export destination of Bahrain is very

limited. Most of Bahrain’s exports go to India and other Asian markets.81

126

Table No. 3.30 Bahrain Exports of Refined products and Values of petroleum exports

Year Exports of

refined

products(1,000

b/d)

Value of

Exports

(Billion

US Dollar)

Year Exports of

refined

products(1,000

b/d)

Value of

Exports

(Billion

US Dollar)

1980 n/a* 3.2 1987 230.15183 n/a*

1981 n/a* 3.9 1988 234.2003 n/a*

1982 n/a* 3.1 1989 232.6398 n/a*

1983 n/a* 2.6 1990 236.28244 n/a*

1984 n/a* 2.7 1991 237.718 n/a*

1985 n/a* 2.4 1992 239.40128 n/a*

1986 232.43056 1.8 1993 236.85819 n/a*

Source: U.S Department of energy, EIA and OAPEC Secretary General

thirteenth Annual Report, 1986. *Data not available.

127

Figure No. 3.22

Bahrain, Qatar, and Oman are not important oil producer as well as oil

exporters, but these states cannot be ignored in geopolitical analysis of oil in

the Gulf region. The oil reserves attest significance of these states in

geopolitics of oil. Qatar is a also major potential gas producer, with the

third largest reserves in the World. All three states play an important role

in U.S power projection. Bahrain with host to the US fifth fleet , Qatar is

agreed to allow the US to preposition brigade set on its soil , and Oman

provides prepositioning and port facilities.

However, oil is the important resources of the world and its

contribution in energy mix is nearly 60 percent. Hence it is an inevitable

resource and sustain economic growth depends on the smooth availability of

this strategic minerals. The uninterrupted flow of oil from the Gulf is a

political, a strategic, and an economic importance. Iraq –Kuwait crisis and

intervention of US and allied forces in the liberating Kuwait from Iraqi

occupation may be considered a significant development in geopolitics

of oil.

128

The present trend of oil consumption demonstrates that world’s oil

demand will rise in future. The Energy Information Administration (EIA)

estimates that world consumption will rise from 89.7 million barrels per

day (MMBD) in 2010 to 98.8 MMBD in 2015, 108.2 MMBD in 2020 and

118.8 MMBD in 2025.This represents only an average annual increase of

1.8 % per year and amounts to a total increase of 41.9 MMBD between

2020-2025 – a cumulative increase of 54 %. Thus the Gulf region has

been and will continue to be, a critical factor in meeting the world oil

demand and in providing oil exports for simple and straight forward

reasons.

The size of the Gulf oil reserves, current oil production capacity,

projected increases in Gulf oil exports through 2025 and direction of Gulf

oil exports and its importance in global economy, sufficiently indicate the

oil is a paramount resource in the energy mix and as well as an important

factor for the sustainable socio-economic growth in the world. The

estimates of various energy agencies, however, agree that the use of oil

in energy supply will continue to dominate in the world energy supply.

The experts of these agencies believe an annual increase of 1.2 to 2.6

percent in the use of oil. Although some experts assume that future

demand for oil and gas will be limited by the impact of other sources of

energy, advances in technology, advances in energy efficiency and the

impact of conservation , the projected estimates of different global energy

agencies are seems to be realistic in terms of the role petroleum will

play in the world’s future energy supply. Currently world oil consumption

is increasing an average annual growth rate of 1.7 percent. The

contribution of oil and gas in total energy supply at present is 68 percent.

The cost of production of oil and gas particularly in the Gulf region is much

lower than the other source of energy. Moreover, the oil and gas is easy to

transport from place of origin to consumer destinations. In addition to these,

oil and gas are found in abundance. All these points provide advantage to

129

oil and gas in world energy supply and consumption. One cannot deny

the fact that some massive technological break through will occur that

will sharply reduced the demand of oil, or some major source of energy

resources will be found outside the Gulf region. It is generally presumed

that world’s dependence on the Gulf oil could be reduced after the

discovery of off-shore oil reserves outside the Gulf region or other

sources of energy like shale oil, fuel cells, nuclear power, fusion, geo-

thermal energy, bio-mass, wind, conservation and host of other means.

However, none of these alternatives could alter the fundamental balance of

world energy supply or reduce global economic dependence on exports

from the Gulf region. The drastic shift in the fundamental balance of world

energy supplies will require massive investments in production,

transportation, and end-use equipment that are expensive and difficult to

accomplish. Further, it is difficult to change the present infrastructure of

world economy by shifting in the broad structure of global energy

balances.

130

REFERENCES

1. Ferruh, Demirmen, “Oil in Iraq : The Byzantine Beginnings”

,Global policy Forum ,April 25,2003.

2. Ibid.

3. The Gulf oil and Gas Sector : Potential and Constraints, The

Emirates Centre For Strategic Studies And Research, UAE,

2006,p.104.

4. Mariam, Karouny, “Oil firms line up for contracts in Iraq”, Reuters,

March 1, 2008.

5. Vahe, Petrossian, “Iraq Opens Doors to Foreign Input”, Upstream,

March, 28, 2008.

6. Faleh al Khayat, “Iraq Prepares Oil Licensing Round without

Federal Oil Law”, Platts Commodity News, January 9th, 2008 & see

http://www.oil.gov.iq/pcld.pdf.

7. Perry, Williams,” A crushing blow to Baghdad’s plans”, Middle East

Economic Digest, July 10, 2009.

8. http://countrystudies.us/Iraq/53.htm.

9. http://online.wsj.com/article/SB126114921937697207.html and see

also U.S Department of Energy, Iraq Country Analysis Brief ,

June 2006.

10. http://www.khabaronline.ir/news-31942.aspx.

11. http://www.independent.ie/world-news/middle-east/iran-army-

withdraws-from-iraqi-oil-field-after-talks-1983302.html.

12. http://www.rigzone.com/news/article.asp?a_id=86237

131

13. http://www.eni.com/en_IT/media/press-releases.

14. Yergin, Daniel, “The Prize: The Epic Quest for Oil, Money, and

Power”, Simon & Schuster, United States, January 15, 1991. p. 204.

15. http://online.wsj.com/article/BT-CO-20091211-702741.html.

16. http://www.zawya.com/Story.cfm/sidANA20091211T091651ZPKJ5

1

17. http://in.biz.yahoo.com/091211/137/bauqpn.html.

18. Ibid.

19. http://www.globalsecurity.org/military/world/iraq/kirkuk.htm.

20. Adel Mirza, "Iraq agrees Majnoon oilfield development plan".

MEED, Middle East business intelligence since 1957, April 25th

2010.

21. http://www.offshore-technology.com/projects/majnoon-field.

22. Ibid.

23. Ibid.

24. Williams, Timothy, "Under Tight Security, Iraq Sells Rights to

Develop 2 Oil Fields". The New York Times, 11th December, 2009.

25. http://news.bbc.co.uk/2/hi/business/8407274.stm,and also available

http://www.france24.com/en/20091220-shell-petronas-first-oil-

initial-deal-iraq-majnoon-oilfield-development.

26. Ibid.

27. http://www.rigzone.com/news/article.asp?a_id=83440&rss=true and

http://online.wsj.com/article/SB10001424052748703522904574589

241516916598.html.

132

28. Hiro, Dilip, “The longest war”, Routledge Chapman Hall Inc., 1991,

p103.

29. http:// news.bbc.co.uk, No.25.

30. http://www.gulfoilandgas.com/webpro1/MAIN/Mainnews.asp?id=98

76

31. Thomas C. Hayes, CONFRONTATION IN THE GULF; The

Oilfield Lying Below the Iraq-Kuwait Dispute, The New York Times,

September 3, 1990.

32. http://www.forbes.com/2010/01/21/biggest-oil-fields-business-

energy-oil- fields.html.

33. Gina Chon, "Iraq Awards West Qurna-1 Oil Field to Exxon, Shell",

The Wall Street Journal, November 5th, 2009.

34. http://business.timeline.co.uk.

35. See U.S. Energy Information Administration, Iraq Country Analysis

Brief, 2007, available at http: // www. eia.doe. gov/ emeu/ cabs/ Iraq/

oil.html.

36. U.S Department of Energy, Iraq Country Analysis Brief, August

2003, p.03.

37. International Petroleum Encyclopedia, 2003, p.219.

38. http://www.crs.gov/RL34064

39. See An –Najah National University-Zajel, The Petroleum Company

1914-1982 (Feb.1, 2005), available: www. zajel. org. / article _ view.

asp?newsID=4519 &cat=15.

40. Ibid.

41. Ibid.

42. Ibid.

43. Ibid.

44. Ibid.

133

45. Ibid.

46. Ibid.

47. Ibid.

48. See U.S. Energy Information Administration, U.S. Department of

Energy (1998), available at http://www.arabchamber.com/arab-

countries/iraq/Y/iea2.html.

49. Ibid.

50. See Energy Information Administration, Official Energy Statistics

from the U.S Govt., Iraq: oil (Aug.2007), available at

www.eia.doe.gov/emeu/cabs/oil.html.

51. Ibid.

52. See U.S. Department of State, Iraq Transition Office, Essential

indicators Reports at 4 (oil production), Feb. 21, 2008. It is not

unusual to see some divergences on Iraqi oil production numbers

depending on their source.

53. EIA, No.50.

54. Ibid.

55. Sameer, N.Yacoub, “Iraq increases Oil Exports”, Albuquerque

Journal, June 21, 2008.

56. Oil and Gas Directory – Middle East, 2009.

57. Ibid.

58. Energy Information Administration, Country Analysis Brief

“Kuwait”, May, 2010.

59. Ibid.

60. Energy Information Administration, Country Analysis Brief “Iran”,

Jan., 2010.

61. Energy Information Administration, Country Analysis Brief

“Oman”, Jan. 2009.

62. Middle East Economic Survey (MEES), Vol. XLVI, No. 40,

October 6, 2003.

63. http://www.rocoil.com.au.

134

64. Energy Information Administration, Country Analysis Brief

“Qatar”, 2007. Available at http: // www. eia.doe.Gov / emeu /

cabs/ Qatar/ Oil.html.

65. Cordesman, Anthony H. “Energy Developments in the Middle

East”, Praeger Publishers, Westport, U.S.A, 2004, p.158.

66. MEES, Vol. XLVI, No.40, October 6, 2003.

67. The Saudi-Kuwaiti divided zone or the “Neutral zone”, 2230 square

miles between the borders of Saudi Arabia and Kuwait that was left

undefined in 1922 contains an estimated 5 billion barrels of proven

oil reserves, shared between the two countries from approximately

600,000 bbl/d is produced.

68. Cordesman, A.H, no. 65, p.201.

69. MEES, Vol. XLVI, No.40, October 6, 2003.

70. Energy Information Administration, Country Analysis Brief “United

Arab Emirates”, Jan. 2009.

71. Organization of Petroleum Exporting Countries (OPEC) Annual

Statistical Bulletin, Vienna, 2008.

72. British Petroleum Statistical Review of the world Energy 2009.

73. Energy Information Administration, Country Analysis Brief

“Kuwait”, May, 2010.

74. Qundt, William B., “Saudi Arab’s oil policy,” The Brookings

institution, Washington D.C, 1982.

75. Cordesman, Anthony H. No. 65, p.202.

76. Energy Information Administration, Country Analysis Brief “United

Arab Emirates”, 2010.

77. British Petroleum AMOCO Statistical Review of World Energy

2001, p 4, 20.

135

78. OPEC Annual Statistical Bulletin, 2008, Vienna, Austria.

79. The main Island was called Al- Awal in the past, hence the name

Awali for the oil field and oil town. Believed to have been the

ancient Dilmun, Bahrain was the classical Tylos: and to add to the

confusion, the name Bahrain was long applied to eastern Arabia

as well as to the Islands.

80. Organization of Arab petroleum Exporting Countries (OAPEC),

Secretary General’s Twenty –Second Annual Report, Kuwait, 1995.

81. Oil and Gas Directory Middle East, 2009.

63A

Map: 3.1

Oil Map of Iraq

Source: http:// www.iraqmapxl.com/images/iraq_oil_map.jpg.

72A

Map: 3.2

Location of Iraq oil field structures and exploration blocks

Source: MEES, Vol. XLVI, No. 07, February 17, 2003.

79A

Map: 3.3

Iraq Oil fields

Source: http://www.lib.utexas.edu/maps/middle_east_and_asia/iraq_oil_2003.jpg

83A

Map: 3.4

Iraq oil fields and facilities

Source: http://www.lib.utexas.edu/maps/middle_east_and_asia/iraq_oilfield_1992.jpg

91A

Map: 3.5

Oil fields around the Gulf

Source: Beaumont, peter and Blake, G.H., “The Middle East: A Geographical

Study”, John Wiley & Sons, New York, 1978.pp.277.

94A

Map: 3.6

Bahrain oil fields

Source: http://ww.mafhoum.com/press/112E16.htm

96A

Map: 3.7

Kuwait Oil fields

Source: http://www.moo.gov.kw/default.aspx?pageld=49

97A

Map: 3.8

Iran Oil and Gas fields

Source: http://www.parstimes.com/images/iran_petroleum_facilities_2004.jpg

100A

Map: 3.9

Oman Oil and Gas fields

Source: http://www.gulfpetrolink.net/publictaionguide/graphics/oman

101A

Map: 3.10

Qatar oil and Gas fields

Source: http://www.geoexpro.com/history/qatardiscoveries

103A

Map: 3.11

Saudi Arabia oil and Gas fields

Source: www.eia.doe.gov/cabs_saudi_arabia/full.html.

Map: 3.12

Saudi- Kuwaiti Neutral Zone

Source: www.eia.doe.gov/cabs_saudi_arabia/full.html.

104A

Map: 3.13

Location of UAE and its major oil fields.

Source: http://allabout_duabi.blogspot.com/uae_oil.htm.

106A