In spite of the fact that little damage was done to Iraq's Oil fields during the war itself, looting and sabotage after the war ended was highly destructive, accounting for perhaps 80 percent of total damage. Starting in mid-May 2003, the U.S. Army Corps of Engineers -- which had the lead in restoring Iraq's oil output to pre-war levels -- began a major effort to ramp up production in the country.
On April 22, 2003, the first oil production since the start of the war began at the Rumaila field, with the restart of an important gas/oil separation plant (GOSP). As of November 2005 Iraq's Qarmat Ali water injection facility reportedly was operating at only 70 percent of capacity, holding back production from Rumaila and other southern oil fields.
Prior to the recent war, oil industry experts generally assessed Iraq's sustainable production capacity at no higher than about 2.8-3.0 million bbl/d, with net export potential of around 2.3-2.5 million bbl/d (including smuggled oil).
One major challenge in maintaining, let alone increasing, oil production capacity, was Iraq's battle with water cut, especially in the south. In 2000, Saybolt International had reported that Iraq�s Northern Oil Company (NOC) and Southern Oil Company (SOC) were able to increase their oil production through use of short-term techniques not generally considered acceptable in the oil industry (i.e., injection of refined oil products into crude reservoirs). The Saybolt report now appears to have been largely accurate. In addition, a U.N. report in June 2001 said that Iraqi oil production capacity would fall sharply unless technical and infrastructure problems were addressed. Others have pointed to the need for water injection in order to maintain pressure and to avoid Reservoir damage in the southern fields. U.N. oil experts have estimated that some reservoirs in southern Iraq have been so badly managed that their ultimate recovery rates might be only 15 percent-25 percent, Well below the 35 percent-60 percent usually seen in the oil industry.
Iraq's southern oil industry was decimated in the 1990/1991 Gulf War, with production capacity falling to 75,000 bbl/d in mid-1991. That war resulted in destruction of gathering centers and compression/degassing stations at Rumaila, storage facilities, the 1.6-million bbl/d (nameplate capacity) Mina al-Bakr/Basra export terminal, and pumping stations along the 1.4-million bbl/d (pre-war capacity) Iraqi Strategic (North-South) Pipeline.
Seven other sizable fields remain damaged or partially mothballed. These include Zubair, Luhais, Suba, Buzurgan, Abu Ghirab, and Fauqi. Generally speaking, oilfield development plans were put on hold following Iraq's invasion of Kuwait, with Iraqi efforts focused on maintaining production at existing fields.
In October 2005, the SOC re-issued a tender for drilling in southern oil fields. Reportedly, SOC offered improved payment and other terms. Included in the tender was the chance to drill 20 wells in the Mishrif formation of the West Qurna fields (see below). In other news, in September 2005, the US Project and Contracting Office cancelled cancelled part of a contract with Halliburton to refurbish 60 wells in southern Iraq. The contract was then awarded to SOC.
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