Iraq expects crude output from its southern oilfields, Rumaila, Majnoon and West Qurna Phase one, to reach about 2.1 million barrels per day by the end of this year, the head of South Oil Compnay (SOC) said.

State-run SOC gave the estimates after international firms presented development plans and started issuing tenders for work in the supergiant fields, company head Dhiya Jaafar told Reuters in an interview.

Iraq, in desperate need of cash to rebuild after years of economic sanctions and underinvestment, has opened its vast oil reserves and some untapped fields to global oil companies.

It struck major deals in two auctions last year in a bid to raise its production capacity to Saudi Arabian levels of 12 million bpd in seven years from 2.5 million bpd now.

The potential workload in Iraq is unprecedented in the history of the oil industry.

Jaafar said the output target from Rumaila -- the backbone of Iraq's oil production -- is expected to hit 1.085 million bpd after July this year from 1.065 million bpd now, and a more than 10 percent increase in production by the end of the year.

That would take the total production level from the field to about 1.2 million bpd.

BP and China's CNPC signed a 20-year development contract last year to lift output at Rumaila, which has 17 billion barrels of estimated crude reserves.

"In Rumaila ... starting from the month of July, there will be obvious increases," he said in his office in the southern oil hub city of Basra.

"We expect the increase to start after the month of July, from 1.065 million bpd to 1.085 million bpd and then to 1.100 million bpd and so on."

To reach such a production level, a series of tenders worth more than $500 million have been issued, including drilling 56 new oil wells, purchasing electric submersible pumps and installing pipes and other secondary work, he added.

The international companies are moving ahead with development work despite a lengthy process of government formation, after Iraq's March 7 election produced no outright winner and left the country in a political vacuum.

"For the Zubair oilfield, (Italy's) Eni started taking serious steps and is in talks now with the Arab Gulf Company and the Iraq Drilling Company to finalise contracts for new oil wells ... This year, Eni's plan includes drilling 30 new wells," he said.

Eni, along with US-based Occidental Petroleum Corp and KOGAS, sealed a 20-year contract with Iraq to develop the Zubair oilfield. They set an output target of 1.2 million bpd and agreed on a baseline production level of 183,000 bpd now.

Output from the 12.6-billion-barrel Majnoon field, which is being developed by Royal Dutch Shell and Malaysia's Petronas could reach 150,000 bpd by early next year, Jaafar said.

Under the deal, Shell with partner Petronas agreed to boost output to a plateau production target of 1.8 million bpd from the current output of just under 50,000 bpd.

US major Exxon Mobil along with its partner Shell have presented their initial development plan for the supergiant West Qurna Phase One, which has reserves of 8.7 billion barrels. The plan sees a rise in production, possibly up to around 280,600 bpd by the end of 2010, Jaafar said.

The consortium had set an output target of 2.325 million bpd and agreed on a baseline production of 244,000 bpd.

"The initial plan for this year includes a commitment to a 10 percent increase above the current production and it could reach 15 per cent," he said, adding that tenders to drill new wells would be issued later to reach this output target.

Export, storage facilities

Jaafar said Iraq plans to boost storage capacity to 50 million barrels by the end of 2012, to help cope with the anticipated jump in crude production and because it wants to broaden the range of crude export grades.

"We are seeking to have the ability to export three ranges of crude -- light, medium and heavy. That's why we started to build 24 huge new storage tanks," he said.

SOC had invited interest from contractors to rehabilitate and expand export facilities and pipelines in Basra. The $1 billion project -- partially funded by a Japanese government loan -- includes installing three offshore pipelines plus four single-point moorings (SPM).

Jaafar said some of the tenders to expand the export facilities in Basra have been awarded, including an $86 million contract to an Italian company to install an undersea pipeline.

"(Current) export capacity could cover the production increases in 2011 but it will not cover what will be achieved after that," he said. "This is a big project with a lot of challenge. The area was a military theatre during the Iraq war with Iran, there are many sunken ships, mines and rockets."

The project would raise Iraq's export capacity from Basra to 4.5 million bpd by the end of next year from 1.9 million bpd now, with a possibility of raising capacity further to 8 million bpd, Deputy Oil Minister Abdul Kareem Luaibi told Reuters on Tuesday. – Reuters