* Political situation not causing delays to development work
* W.Qurna II oilfield to hit 120,000 bpd in 2012
By Simon Webb
(Recasts, updates throughout)
KUWAIT, April 27 Development of Iraq's oilfields
by foreign oil companies is progressing swiftly despite the
lengthy process of government formation after Iraqi elections in
March, a senior Statoil (STL.OL) executive said on Tuesday.
"The major oil companies are starting to move forward at a
very high speed. Oil companies are tendering huge contracts and
making commitments in the market," said Kjetil Tonstad,
Statoil's vice-president for International Exploration and
Production, Middle East. "Execution is going full speed ahead
despite the political situation."
International oil firms have signed up to deals that could
vault Iraq into the top three of world oil producers in 2017.
But final deals were signed just months before elections in
March, leading to concern that politics could delay work.
Iraq is in a political vacuum after an inconclusive vote,
with former prime minister Iyad Allawi winning a slim lead over
Prime Minister Nuri al-Maliki and neither side yet to conclude
tie-ups with groups that would give them a majority.
"Both Maliki and Allawi are positive on the contracts," said
Tonstad, talking to reporters on the sidelines of an energy
event. "No questions were raised in the election campaign or
after questioning the contracts. A contract is a contract, it's
awarded and then you have an obligation to go ahead."
Norway's Statoil and Russian partner LUKOIL (LKOH.MM) would
increase output to 120,000 barrels per day (bpd) at Iraq's West
Qurna phase two oilfield in 2012, Tonstad said. That was the
level set by Iraq for first commercial production at the field.
The consortium has already started issuing tenders for work
at the field, he said. He declined to give further details.
Lukoil and Statoil sealed the 20-year deal to develop the
West Qurna Phase Two, a 12.9 billion barrel oilfield in the
south, in an auction in December.
In a presentation to an industry event, Tonstad hailed the
opening of Iraq's oilfields to foreign investment last year as
marking the largest opening in an oilfield province since the
collapse of the former Soviet Union.
"We still haven't captured the significance of this
historical moment," he said.
Plans to reach around 12 million bpd of output under the
contracts in 2017 were feasible, but faced a myriad of
challenges, he said. The development would mark an unprecedented
build in capacity in the oil industry, marking an increase of
around 10 million bpd from Iraq's current capacity of 2.5
Challenges included security in a country emerging from war
and sectarian violence, access to water, and limited
construction capacity and workforce availability, he said.
The ability of the world oil market to absorb 10 million bpd
of increased output in such a short time was also unclear, he
"From my point of view, the fields can deliver, the
infrastructure can be dealt with, but can the market take all
this oil? And if not, does Iraq want to invest billions of
dollars in building capacity that would remain idle?"
Statoil was evaluating the possibility of taking part in an
upcoming bidding round for Iraqi gas fields, he said.
(Reporting by Simon Webb; Editing by Amanda Cooper)