November 29, 2010 / 2:10 PM / 9 years ago

UPDATE 2-Iraq oil output may hit 8 million bpd by 2017

* Former oil min effectively cuts projected output target

* Most analysts see Iraq producing much more modest volumes

* Government sees Kurdish exports from January

(Adds comment on Kurdish oil deals)

LONDON, Nov 29 (Reuters) - Iraq could more than triple oil output by 2017, a senior advisor to its prime minister said on Monday, effectively cutting previous estimates but giving a figure that would still make Iraq one of the world’s top producers.

Iraq has signed deals with international oil companies following auctions last year that could in theory take capacity to 12 million barrels per day (bpd) by 2017 — a figure that most analysts view as unrealistic.

“I expect we will reach a capacity of 8 million barrels per day within the next six-seven years,” Thamir Ghadhban, who served as oil minister after the U.S.-led invasion of Iraq in 2003 and now advises Prime Minister Nuri al-Maliki on oil, told a conference on Monday.

Analysts have cited undeveloped infrastructure and security concerns as the key obstacles preventing Iraq from reaching output of 12 million bpd - which would make it the world’s largest oil nation or put it on a par with current leader Saudi Arabia.

The country, which sits on some of the world’s largest oil reserves, has struggled in the past years to push its output even close to the 3 million bpd it saw in the late 1980s before it invaded Kuwait and saw a U.S. military retaliation.

A Reuters poll suggested last month Iraq’s crude oil output would rise to 2.8 million bpd by 2011 from roughly 2.5 million bpd now and reach only 4.6 million bpd by 2015.

Current Oil Minister Hussain al-Shahristani has said he expects 4 million bpd in three years’ time and that there is no need for Iraq — for now the only member of the Organization of the Petroleum Exporting Countries exempt from its system of output curbs — to have a production target until then.

Government spokesman Ali al-Dabbagh told reporters that Iraq’s output would be boosted by crude from its semi-autonomous Kurdistan region from January next year.

Producers in Kurdistan, including Norway’s DNO, stand ready to export over 100,000 bpd at short notice, industry executives say, but so far a dispute between Baghdad and the region’s government has prevented this, except for a short period in 2009.

Shahristani has described contracts the regional government signed with foreign companies as illegal but Dabbagh told reporters a deal was under discussion.

“Part of smoothing the relation with Kurdistan is that these contracts need to be legitimised and we want to find a formula which makes this workable within Iraqi prevailing law, keeping the sovereignty of the federal government so that they have a hand with the region to manage the new oil fields,” he said.

“I don’t think it will be difficult,” he added.

Last week, Iraq’s president formally asked Maliki, leader of a Shia bloc, to form a new government, after he secured support from some Sunni Arab leaders and the Kurds.

Iraq’s 2011 production target of 2.3 million bpd assumes Kurdish production of 150,000, Dabbagh said.

If the region doesn’t reach this level, it will face penalties in the form of deductions, on a proportional basis, from the 17 percent of total oil revenues which the region is allocated by the central government. (Reporting by Emma Farge, writing by Dmitry Zhdannikov and Tom Bergin; editing by Anthony Barker)

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