The global oil industry has its eyes pinned firmly on the goings on in Iran and Iraq’s crude oil sector, with many believing that the two countries may go rogue and flood the market with millions of barrels of crude as their infrastructure gets rebuilt and comes back online, security is improved, and, in the case of Iran, sanctions are lifted.
However, the reality may be somewhat different. According to regional analysts Iran faces a large problem; that of declining oil wells onshore. So, even if sanctions were lifted and IOCs gamefully leapt in and started production, getting sufficient quantities of oil out of the ground may not be as easy as just drilling a hole or changing defunct rig architecture.
IOCs would be looking at using EOR techniques to recover the crude from Iran’s declining wells, many of which have been in production since the late 1970s. EOR means higher production costs, add that to the cost of putting in infrastructure, not just on fields, but infrastructure for transporting the oil and Iran’s oil hopes may be more along the lines of oil dreams, especially when the country has a target of 5mbpd by 2018. Admittedly, offshore remains largely unexplored and this may hold the key.
In the case of Iraq, the country has set itself targets that are so high as to be unattainable. The government sponsored INES report, designed to give some idea of what Iraq is capable of producing, was based on flawed data from IOC predictions for well production put forward in round one and two concession bids in 2009.
The first thing that needs to happen in both these countries is that an accurate picture of what can feasibly be produced from their fields must be built. This picture must take into consideration the security and infrastructure issues in Iraq, and the ongoing sanctions and declining fields in Iran. Only then can any IOC or NOC know what is really going on. Please send your comments to georgina.enzer@itp.com.
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