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Tapping new oil sources in Iraq

Tapping new oil sources in Iraq

As the country opens its oil fields to the highest bidder, output is bound to increase. What about its price?

September 15, 2008 1:48 by

The world’s largest oil companies will be meeting with Iraq’s oil ministry in London next month for a chance to re-enter the country, which has the third largest reserves of oil.

Around 40 companies – including BP, Royal Dutch Shell, BG and Exxonmobil – are bidding for long-term oil and gas service contracts in six fields in Iraq. The country hopes to raise oil output by a combined 1.5 million barrels per day (bpd) in those fields. It also wants to increase overall output to 4.5 million bpd by 2013, up from the 2.5 million bpd currently being produced.

Baghdad has said it wants to sign the deals by mid-2009.

With Iraq opening up its oil market to international firms, what will this mean for the rest of the oil-producing nations and Opec (Organization of the Petroleum Exporting Countries)? Opening up of a new source of supply will mean that demand is more controlled. So will Opec continue to exercise restrictions on the number of barrels per day? Does it mean that skyrocketing oil prices will slowly come down?

Perhaps it is too early to speculate.

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