BAGHDAD, June 28 The Iraqi government said it is setting up a new oil company in the southeastern province of Maysan with the goal of more than tripling oil production in the region in the next five years.
The new Maysan Oil Company will be split from the Southern Oil Company and established as a separate state-run firm, a government statement, released late on Friday, said.
Together with the existing Northern Oil Company, Iraq will have three state-run oil firms.
Oil Minister Hussain al-Shahristani said this week that each Iraqi province producing at least 100,000 bpd would get its own state-run oil company to focus on developing oilfields there.
The move is designed to expand oil activities in Maysan, a large, oil-rich but poor province bordering Iran, and to achieve the best use of the province's oil fields, the statement said.
Total oil output from Maysan province is between 100,000 and 110,000 barrels per day (bpd), the statement said.
"One of the targets of this company is to increase oil production in this province in the coming five years to reach 360,000 bpd," it said.
Maysan province, which has six producing oil fields and five not yet in production, had been "neglected and marginalised for decades", the statement said.
The new company will have the authority to coordinate with international companies to develop the province's oil fields with the aim of increasing their capacity, it said.
The new company's functions will include oil and gas production and exports through Basra. It will also provide Maysan refinery with oil and supply oil and gas to power stations, the statement said.
The new company will have capital of 9.5 billion Iraqi dinars (about $8 million).
Oil is Iraq's primary source of revenue and high oil prices will help it raise the billions of dollars it needs for reconstruction after years of sanctions and war. Oil closed above $140 a barrel in New York on Friday after touching a record high of nearly $143.
Iraqi security forces this month launched an offensive against Shi'ite militias in Maysan, reputed to be a weapons-smuggling centre.
Iraq has the world's third-largest oil reserves at around 115 billion barrels, but it needs heavy investment to modernise its oil industry.
Iraq's Oil Ministry said this week it had finished negotiations with oil majors on six short-term oil service contracts and hoped to sign the deals in the next month.
The deals are aimed at lifting output at Iraq's largest producing fields by a combined 500,000 barrels a day.
Officials say Shahristani will announce on Monday which producing fields will be open for long-term development contracts.
Shahristani told Reuters on June 1 that Iraqi oilfields were pumping more than 2.5 million bpd, the highest since the 2003 U.S.-led invasion. Iraq would produce up to 2.9 million bpd by the end of 2008, he said. (Reporting by Waleed Ibrahim, Adrian Croft; Editing by Jason Neely)
Our top photos from the last 24 hours.