Iran, Iraq in bidding war over reserves

Iran increased its estimated oil reserves on Monday to a level which would return it to third place in the world after Iraq said last week it had overtaken its neighbour.

Coming ahead of an Opec meeting on Thursday, one analyst said the two countries were in a "bidding war" over reserves, which is usually a consideration including other criteria such as production capacity when it comes to allocating quotas.

Oil Minister Massoud Mirkazemi told a news conference Iran had 150.31 billion barrels of reserves, up from a previous estimate of 138 bn barrels and added that figure would be revised even higher soon.

"This latest figure will definitely go up by the end of the year," he said.

Last Monday, Iraq raised its proven oil reserves figure by a quarter to 143 bn barrels, surpassing Iran and putting it behind only Saudi Arabia in terms of conventional crude, and third after Venezuela if unconventional reserves are counted.

Amrita Sen, an analyst at Barclays in London, said of the rival claims by Iran and Iraq: "It looks like almost a bidding war."

During the Iran-Iraq war in the 1980s Opec meetings were dominated by Iraq demanding an output quota equal to Iran's. The situation was only resolved after the war when some OPEC members gave up some of their shares for Baghdad to have an equal quota.

Iraq said last week its revised figure would help it get a higher Opec quota in the future. It is exempt from the quota system while it recovers from years of war. Thursday's meeting is not expected to set new quotas or alter output targets.

Sen said the headline reserves figure was only part of the story, and did not reflect a country's ability to pump crude and get it to market.

"It is not a question of how much reserves they have got in the ground but how much oil they can produce. Iran's production rate from mature fields is one of the highest in the world."

Mirkazemi said Iran's production capacity was 4.2 m barrels a day but was pumping less due to its Opec quota.

The Islamic Republic is under increasingly tough economic sanctions due to concerns about its nuclear programme -- which it denied is aimed at making a bomb -- but it remains the world's fifth-largest oil exporter.

Mirkazemi played down the sanctions' impact on foreign investment in Iran's oil exploitation which led Western firms including Royal Dutch Shell and Total to pull out of projects, and Asian countries such as Japan's Inpex Corp reportedly considering a similar move.

He said Asian and European companies were still cooperating in Iran's energy sector, but did not give names.

When asked whether Chinese companies were also reducing their activities, he replied: "All countries can be involved in (Iranian energy projects). We still stick to our principles.

"Those who are interested to invest can do so. While we understand the situation of countries which are concerned, those who act in a hostile way will be in our black list.

"We have large financial resources and are not worried about financing in the oil industry," he said.

Mirkazemi also raised his estimate for Iran's gas reserves -- the second biggest in the world after Russia's -- to 33.1 trillion cubic metres, from 28 trillion cubic metres repeviusly.

Iran had discovered a new gas field in the southern Hormuzgan province, he said. The Sefid (White) field has an estimated 70 billion cubic feet of gas in the field, 72 per cent of which is recoverable, he said.

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