NICOSIA (AFX) – Iraq’s oil ministry has finalised an “optimistic” plan to raise oil output to 2.8 million barrels per day (b/d) by April 2004, the Middle East Economic Survey (MEES) said in a report.

The target figure depends on the “necessary security, electric power and finance” being in place, the Cyprus-based industry newsletter said.

“The approximately US$1.6 billion plan calls for a sustained production capacity of 1.5 million b/d by October 2003, rising to two million b/d by December 2003 and 2.8 million b/d by April 2004,” MEES said, putting Iraq’s domestic consumption at around 350,000 b/d.

The plan will focus on the “repair and rehabilitation of the surface facilities of the upstream sector which received the brunt of the bombing in the war, and the looting and sabotage afterwards.”

The Southern Oil Co and Northern Oil Co and other ministry-affiliated firms, notably the State Company for Oil Projects, will manage the projects, MEES said.

Procurement and engineering is being carried out initially by US’ Kellog Brown and Root (KBR) and later by the winners of the new tenders announced by Team RIO (Restore Iraq Oil) and expected to be awarded in the second half of August.

The US will provide through KBR over US$1 billion in funding, while Iraq will provide the rest, MEES said.

The newsletter warned, however, that the plan seemed “optimistic, considering the many bottlenecks and challenges facing Iraq today… (such as) security, stability, finance, power shortages, delays to oil-for-food contracts and, last but not least, the continuation of looting and sabotage.”

MEES added that the Iraqi oil ministry aimed “during the fourth quarter of this year to draw up plans to restore the country’s pre-1990 production capacity of 3.5 million b/d during the period 2004-5.

The ministry also intends to review in the coming few weeks contracts signed by Saddam Hussein’s ousted regime with neighbours Jordan, Syria and Turkey.

“The heavily discounted crude and products supply agreements with these neighbouring countries are not expected to be renewed,” MEES said.