Iraq Sunni, al Qaeda Area Flush With Oil – Slick Battleground

A recent study has concluded that Iraq has twice as many oil reserves as previously thought, mostly in western Anbar province, the stronghold of the Sunni insurgency and al Qaeda in Iraq.

The estimated 100 billion additional barrels of oil would take Iraq’s reserve base up to 225 billion barrels, second in the world only to Saudi Arabia’s depository of 375 billion barrels.

Until now, Iraq’s western region was believed to be resource-poor compared to the Kurdish north and the Shiite south.

The discovery could have a substantial impact on Iraq’s fledgling political reconciliation process, and may significantly reduce the local population’s support for the insurgency.

After the election of the Shiite-led government of Prime Minister Nouri al-Maliki, the minority Sunni population feared being all but frozen out of the new Iraq, including the sharing of oil revenues collected by the central government in Baghdad.

Oil reserves in Iraq’s west have previously been under-explored because the country has had a surplus of oil and little incentive for further exploration.

Information about Iraq’s substantial western oil reserves is contained in the new Iraq Atlas produced by the Colorado-based consulting firm IHS, Inc., which was commissioned by the Iraqi government to re-interpret seismic data collected by Iraq over several decades using the latest technology.

This year, the Iraqi parliament is expected to pass a hydrocarbon law which will open the country’s oil fields up for foreign investment. The government will then launch bids for 65 exploration blocks and 78 fields.

The challenges of developing oil fields in volatile Anbar province are considerable. Most recently, tribal chiefs stepped up their revolt against al Qaeda, who arrived in Iraq after the US-led invasion and annexed many local insurgency groups.

Despite the challenges, local leaders are elated at the prospect of oil-driven economic development and prosperity in the impoverished region.

Mayor Farhan Farhan of Qaim, the nearest populated area to the Akkas oil field, told the New York Times, “If we use this petroleum, it will be enough for all the west of Iraq.”

Iraq’s current production capacity of two million barrels of oil per day would be doubled if political stability were restored and production facilities repaired and modernized.

Mohamed Zine, IHS’s regional manager for the Middle EastZine, has said: “The cost to produce oil in some Iraq fields is less than $2 per barrel according to our estimates and investments involved in developing the fields are minimal.”

After three consecutive record-setting days, oil prices hit $72 a barrel on Wednesday.

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