Replies to post #568 on The Rising Influence of Rising Affluence

[DewDiligence]

From the same write-up:

The 20-year contract calls for the companies to be paid $1.39 per barrel produced above current output levels. The businesses have said they hope to raise production from the current 45,900 barrels per day to 1.8 million barrels per day by 2020.

Since the baseline production of this well is tiny, to a first-order approximation we can say the baseline is zero; hence, the Majnoon consortium will effectively be paid a flat $1.39 for each barrel of oil produced. As far as I can tell, this $1.39/bbl is the entire profit pie for the consortium—anything else it receives is considered reimbursement for development costs.

[DewDiligence]

Iraq could add 10M boe/d by 2017—maybe:

http://online.wsj.com/article/SB10001424052748704875004575374983987411158.html

Two oil-licensing auctions last year awarded 11 deals to international oil companies. If all the companies live up to their production promises, the projects will add nearly 10 million barrels a day of capacity by 2017 to Iraq's existing output of 2.5 million barrels a day.

Getting to that level, however, will require immense investment by the companies and tricky coordination between the rival firms and the government. One big question is how the players will coordinate to fund and build a massive, shared water-injection system needed to boost field performance in the south of the country.