Impoverished Iraqi province basks in petrodollar scheme as oil output surges

The impoverished Province of Dhiqar is getting a boon from Iraq’s petrodollar scheme as oil output from the province’s oil fields is estimated to reach 300,000 a day in this year’s fourth quarter.

Dhiqar shares some of its most prolific oil fields with the southern Province of Missan and together the two are expected to earn $500 million this year.

The petrodollar project allows oil-producing provinces to add at least $1 to their budgets for each oil they produce.

Russia’s Lukoil is the most active foreign firm in the province with a technical service contract to develop Dhiqar’s West Qurna-2, one of the world’s largest oilfields with proven reserves estimated at 12.9 billion barrels of oil.

Developing of new oilfields in Dhiqar is proceeding with the giant Russian firm recently winning a bid for a key oil block in the province.

Under the new Iraqi service contracts, oil firms are required to do their best to reach high production rates to compensate for their expenses and risks – output is the only way for them to recoup their costs and make profits.

For instance, Lukoil, once it recovers its costs from the sales of West Qurna-2 oil, it will start charging $1.50 for each barrel the field produces.

In anticipation of a surge in output, Dhiqar province has announced plans for the construction of a 300,000-barrel oil refinery, said Governor Taleb al-Hassan, adding that bidding for the refinery will start  once the designs are ready.