U.S. oil giant has announced the resumption of drilling in Iraq’s Kurdistan region. Operations in the area had been suspended last year following tensions which were sparked between the region’s semiautonomous government and the central government in Baghdad after a controversial referendum to seek independence.
In the KRI – Kurdistan Region of Iraq, Chevron operates the Sarta block in which it has an 80% stake. Additionally Chevron also operates the Qara Dagh oilfield in which it also has an 80% interest in a production-sharing contract. The two blocks sit on a combined area measuring 1,129 square kilometers.
Last year in September Chevron had drilled a well at the Sarta block but operations were stopped Iraqi forces were as well as Hashd al-Shaabi paramilitaries were moved into Kirkuk. The government of KRI has claimed that since oil production was stopped in Kirkuk revenues have fallen by close to 50%.
Earlier this month the central government in Iraq indicated that it will not remit gross payments that are owed to oil firms which have inked deals with the regional government in Kurdistan. Instead Baghdad will require oil firms to sign new contracts with Iraq’s central government.
Chevron’s resumption of production in KRI comes in the wake of Iraq’s oil minister, Jabbar al-Luaibi, indicating that the Middle Eastern country was to significantly raise petroleum production and this could entail giving more exploration licenses.
“At the moment, our situation, when it comes to production, is excellent thanks to God, and we stand at the threshold of 5 million bpd. The federal government plans to reach 7 million bpd by 2022,” said Jabbar al-Luaibi.
The oil minister added that the oil refining facilities which had been destroyed by the Islamic Caliphate group in Kisk, Qayyara, Haditha and Siniya in Northern Iraq had been rebuilt and were producing around 70,000 barrels per day. It is estimated that Iraq’s oil reserves are approximately 145 billion barrels. According to the oil minister this could increase to more than 200 billion barrels if more exploration was done.
This coincides with the country’s ongoing reconstruction efforts following the destruction caused by ISIS. It is estimated that Iraq will require approximately $88.2 billion for the reconstruction efforts. Mosul, the second biggest city in Iraq and which was recaptured last year in July from the extremist group is among the areas that are hardest hit. To repair the oil infrastructure that was destroyed Iraq will need to spend approximately $7 billion on its gas and oil fields.