Vienna (Platts)--9Jun2011/653 am EDT/1053 GMT

Iraq's Oil Ministry is waiting for a report by international consultants before deciding the extent of a cut in oil output expansion targets from southern fields and may slash original estimates down from 12 million b/d to around 7-8 million b/d over an extended plateau period, Oil Minister Abdul Karim Luaibi said Wednesday.

"We have completed the first phase of discussions with international consultants and we've offered to another consultant. In two to three weeks, we'll have a better idea," Luaibi said on the sidelines of the OPEC meeting in Vienna.

Luaibi was elaborating on remarks made a day earlier where he suggested Iraq was revising plans to raise crude oil output capacity to over 13 million b/d within seven years from 2.7 million b/d currently.

Under the terms of 12 long-term service contracts awarded in two bidding rounds in 2009 and 2010, foreign oil companies were to raise output from the fields awarded to a plateau target within seven years of the contract coming into effect. The majority of contracts, with a few exceptions, specify that plateau production be maintained for a further seven years.

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"Some contracts were concluded on the basis of a plateau for seven years. Our ambition now is to extend the plateau from seven to 13-14 years so that the infrastructure that we're building for this target can be used for years to come. Production could be 7-8 million b/d with the lengthening of the plateau, which would be more economical and more realistic," Luaibi said.

Achieving this level of output will require massive amounts of water injection at major fields such as Zubair, Rumaila and the West Qurna structure. Luaibi said water reinjection volumes would be amended in line with lower output targets. The US' ExxonMobil, consortium leader for West Qurna 1, is leading the water injection project, which at one point envisaged using 10 million b/d of treated seawater piped from the Persian Gulf.

"We have started briefings on the project. There's been a change in the amount of water that's needed," Luaibi said, adding that operating companies had submitted new figures. The project will be conducted in stages, he said. The first phase will be for 2 million b/d of water injection within three years, rising to 1.5 million b/d in a second phase. The third phase has not yet been determined.

"We've started to look at new scenarios for our production levels, so the water injection will be determined by the final production figure to be agreed," Luaibi said.

Iraq is expanding export infrastructure to cope with the additional crude oil being produced from Rumaila, Zubair and West Qurna 1, all of which attained their 10% increment within the first year of operation rather than the contractual three. This has led to bottlenecks and Luaibi said some output was being held back.

Iraq is adding two single point moorings each of 900,000-1 million b/d capacity at southern export terminals and is building a land pipeline which will be ready by the end of July, Luaibi said. Completion of this first phase will add 1 million b/d to southern export capacity of around 1.8 million b/d.

The second phase expansion will be completed by 2013, taking export capacity from southern ports to 5 million b/d.

Iraq also has several export pipeline projects planned, including three pipelines -- two crude oil and one gas pipeline -- through Syria.

The northern crude oil export pipelines running from the Kirkuk fields to Ceyhan in Turkey has capacity to carry 650,000 b/d but is running at less than 500,000 b/d, he said.

"There is an old line and a more modern line. We want to repair the infrastructure damage and the aim is to raise capacity to 1 million b/d in 2013," Luaibi said.

He again referred to declines in output from the giant Kirkuk field though he gave no figures. "The field is suffering from a lot of problems. We are on the verge of appointing a consultant to perform a new study on the field," Luaibi said.

Experts believe Kirkuk, discovered in 1927 by the Iraq Petroleum Company in which Shell was a shareholder, is in decline. Shell was awarded a contract to carry out a technical study on Kirkuk in 2005.

Iraq's northern production accounts for around 700,000 b/d of total output, estimated at 2.665 million b/d in May. Northern oil output in the first four months of 2010, when there were no Kurdish exports, averaged 663,000 b/d and 649,000 b/d for the full year. This compares with an average of 629,000 b/d in the first fourth months of 2011, discounting Kurdish oil exports which resumed in early February. This would imply a decline of around 30,000 b/d with falls from Kirkuk offset by rises from other fields such as Bai Hassan, Ajeel and Khabbaz.

Luaibi said the pipelines through Syria would link northern, central and southern oil fields. The project is expected to begin in the next few months.

The crude pipelines will have capacity to transport 3 million b/d. "They will link the center, south and north together in the same system. That will give us flexibility to export from the north and the south," Luaibi said.

One pipeline will run regular crude, mainly from southern fields, and the second will carry mainly heavy crude from a group of fields, including Najmah in the north. Luaibi said the heavy blend would be crude with an API gravity of over 20 and the regular crude pipeline will carry crude of around 31 API.

Asked about the status of the Nassiriyah field, which Iraq has been negotiating for years with a Japanese consortium, Luaibi said four rigs were operating at Nassiriyah and the field was producing 40,000 b/d in the first phase. The Iraqi side had proposed that the project be developed as one package to include a refinery.

"We've proposed to the Japanese that the project will be one package with a 300,000 b/d refinery in Nassiriyah. If a party can present an integrated project, it will be better for us. We don't have the capacity to export from there," he said.

--Staff, newsdesk@platts.com