UPDATE 1-New wells, overhauls for Iraq’s West Qurna One-official

* Eight new wells planned for Iraqi supergiant

* Overhauls for up to 50 other wells

* Supergiant field has reserves of 8.7 billion barrels

(Adds details)

By Rania El Gamal and Ahmed Rasheed

ZUBAIR, Iraq, May 24 (BestGrowthStock) – The initial development
plan agreed by Exxon Mobil (XOM.N: ) and its partners for Iraq’s
West Qurna Phase One oilfield includes drilling eight new wells
and overhauling up to 50 wells this year to boost output, an
Iraqi oil official said on Monday.

International oil service firms will be invited to drill
four new wells and state-run Iraqi Drilling Company is working
on the remaining four to increase production beyond current
output of 225,000 barrels per day (bpd), said Bassem Abdul
Karim, head of the Operation Department in the South Oil Co.

“We will issue a tender for the other four wells … and
there will be workover (tenders) for 45 to 50 wells until the
end of the year,” Abdul Karim told Reuters in his office in the
southern oilfield of Zubair.

The tenders, which will be discussed in a Joint Management
Committee (JMC) meeting of executives from Exxon, its partner
Royal Dutch Shell (RDSa.L: ) and officials from Iraq’s SOC, will
be open to all firms including foreign service companies such as
Weatherford International (WFT.N: ) and Fluor Corp (FLR.N: ), said
Abdul Karim, who is also a member of the JMC for West Qurna
Phase One.

Exxon and Shell won the right to develop the
8.7-billion-barrel West Qurna Phase One in an auction held by
Iraq last year for oilfield development contracts.

The consortium pledged to increase production to 2.325
million bpd after setting baseline production at 244,000 bpd.

The deal is one of a series to develop major and untapped
oilfields that could catapult Iraq to third place among world
oil producers and boost its capacity to Saudi Arabian levels of
12 million bpd from around 2.5 million bpd currently.

WATER A BIG CHALLENGE

But several obstacles remain. Iraq’s oil sector has been hit
hard by years of war, sanctions and underinvestment.

One of the main challenges is to provide some southern
fields with huge amounts of water to boost pressure and output.

Water injection helps to increase the amount of crude that
can be pumped from oilfields and will be a key to enabling the
oil firms to reach ambitious production targets.

Production from West Qurna, which has pumped since the late
1990s, reached a peak of 400,000 bpd before the U.S.-led
invasion in 2003 but output started to fall due to declining
pressure in the field, said Abdul Karim.

To help overcome this problem, Exxon is taking the lead in a
multibillion-dollar water injection project on behalf of
international oil companies that won contracts in southern Iraqi
fields such as West Qurna, Majnoon, Zubair, and Halfaya that
lack sufficient water resources.

“(For West Qurna) We have around 500,000 barrels of water
that we can use in the first two or three years, but after that
we will be short of water,” Abdul Karim said.

Other companies such as Italy’s Eni (ENI.MI: ) are also in
talks with Iraqi officials about water sources as development
work is progressing slowly in the 4-billion-barrel Zubair field.

“Eni has meetings with parties from South Oil Co to discuss
the issue of water injection in the Zubair field. They want to
benefit from using two water injection facilities and to fix
existing problems,” Habeeb Haider, a member of Zubair’s Joint
Management Committee, said.

Eni aims to overhaul around 100 existing wells this year as
part of its initial development plan, added Haider.

“Eni now is holding meetings with the Iraqis working in the
field to study rehabilitating existing halted wells and drilling
new ones. They (Eni) are focusing to start the work with working
over about 100 oil wells,” he said.

The Eni-led consortium set a plateau target of 1.2 million
bpd for Zubair and agreed on a baseline production level of
183,000 bpd.

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(Additional reporting by Aref Mohammed; editing by Jim Loney)

UPDATE 1-New wells, overhauls for Iraq’s West Qurna One-official