Jan 20 2013
By Shaymaa Adel
Azzaman, January 20, 2013
Iraq’s oil riches are a blessing for a country that has seen ruinous wars and devastating civil strife. But they can also be a bone of contention.
The sparring is pitting two of Iraq’s richest oil provinces against each other.
The provinces of Missan and Basra both lay claim to the giant Majnoon oil field, one of the world’s largest with recoverable reserves estimated at 38 billion barrels.
The authorities in Missan say Basra is claiming most of the field and that almost all the current drilling activities and oil wells being dug fall within its provincial borders.
They have asked the Ministry of oil to delineate their provincial borders and clearly mark which parts of the field belong to each of the two provinces.
The ministry says it is not its job to demarcate provincial borders and that its main interest is increasing oil output from Majnoon and thereby boosting the country’s economy.
Majnoon straddles the borders of both provinces but so far the ministry has shunned work on blocks within Missan province.
Iraq has an engineering and procurement contract with oil giant Shell and the foreign major has drilled scores of wells with output expected to hit 200,000 barrels a day this year – a level enabling the foreign major to recover costs.
Oil production is crucial not only for Iraq’s economy which almost exclusively relies on exports for hard cash, but for the producing provinces as well.
Each province is entitled to $2 for each barrel produced within its borders. Basra has emerged as the country’s largest beneficiary from the so-called the ‘petrodollar scheme’ since it contributes to the lion’s share of Iraqi oil output of about 3.4 million barrels a day – a level not reached in the past 30 years.