Iraq's crude oil production capacity from the Kurdistan region in northern Iraq is 300,000 barrels a day, Ashti Hawrami, the region's oil minister said Tuesday.
However, Kurdistan isn't producing that amount of oil because it has suspended exports via Baghdad's pipeline running to Turkey due to financial issues with the central government in the capital.
"Output capacity from Kurdistan is expected to increase to 400,000 barrels a day by the end of next year," Mr. Hawrami told an Iraqi energy conference being held by the CWC Group in London.
The minister is expecting production from the Kurdish region to reach 1 million barrels a day by the end of 2015 and 2 million barrels a day in 2019.
Proven oil reserves in Kurdistan have gone up from 1 billion barrels five years ago to around 44 billion barrels now, he added.
He said some 40 to 50 international oil companies are currently working in Kurdistan under production-sharing contracts concluded with them during the last five years.
The Kurdistan Regional Government-known as KRG-suspended crude oil exports of nearly 100,000 barrels a day in April this year, protesting that Baghdad was delaying payment of around $1.5 billion that the region needs to pay to contracting companies.
Kurdistan says only two payments totaling $514 million have been received, with the last payment made in May 2011. Baghdad said earlier this year that it is releasing the payment of $560 million but was awaiting an audit to pay it.
Mr. Hawrami said that the entire audit has been made and sent to Baghdad but payment hasn't been issued yet.
Tensions between Baghdad and the Kurdish region have risen since October when U.S. energy giant Exxon Mobil Corp. (XOM) announced a deal with the KRG to explore for oil in Kurdistan. Baghdad warned the U.S. oil giant could risk its agreements with the central government.
Mr. Hawrami expected three more oil majors to join the development of the oil and gas sector in Kurdistan. He didn't name them.
The Iraqi central government last year reached an agreement with the Kurdish authorities to resume oil exports from the semi-autonomous region as from February after a suspension of more than year, and agreed to pay exploration costs and expenses to foreign firms in the KRG.
The Kurds and the central government, which grants all oil-export licenses, have been at odds over oil contracts the Kurds signed with foreign companies. Baghdad doesn't recognize the contracts.
Also unresolved is the enactment of an Iraqi oil and gas law and revenue-sharing law as one package, which Mr. Hawrami said it is needed to ensure long-term investment in the region. Under the current arrangement, Baghdad has agreed to compensate contracting companies in Kurdistan for the costs of their exports, but not for profits. The Kurds hope to have a law enacted as soon as possible, but past efforts have died in Iraq's parliament.
Source: Exxon Mobil Corporation