Shrinking oil reserves crimp Iraqi Kurdistan's allure

Thu Mar 10, 2016 7:13am EST
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* Genel, Afren slash reserves estimates in key fields

* Wells hit water, revealing complex rock geology

* Kurdistan region already facing political, security turmoil

By Ron Bousso

LONDON, March 10 (Reuters) - A string of downgrades to Iraqi Kurdistan's oil reserves is a fresh blow to the autonomous region's fledgling oil industry already crippled by conflict, political strife and low crude prices.

The revisions - resulting from a closer inspection of oilfields after drillers hit more water than expected - take the shine off one of the world's largest oil and gas reserves, which had drawn investors such as Exxon Mobil.

A further loss of faith in the region's oil bonanza also pressures the debt-ridden Kurdistan Regional Government (KRG), which has struggled to ramp up production and exports due to pipeline outages and conflict with Islamic State militants.

"The recent reserve downgrades are another blow to optimism about Kurdish oil production," said Richard Mallinson, geopolitical analyst at consultancy Energy Aspects.

"While there are substantial amounts of oil in this underexplored province, companies are finding it is not as easy to find or produce in the quantities initially expected."   Continued...