Progress in rebuilding the oil infrastructure in Iraq is moving at an impressive pace, according to Rob McKee, former senior oil advisor to the Iraqi Coalition Provisional Authority. McKee, formerly an executive with ConocoPhillips, returned to Houston from Iraq this spring, and shared his experience in a recent conference call sponsored by Prudential Equity Group. Iraq's current production capability is about 3 million barrels of oil a day, and it has the potential to double that, McKee said. It has three major refineries, seven smaller refineries, gas plants, a looped pipeline system and multiple export routes. "So, clearly, if you look at if from an oilman's perspective, it could be nirvana," he said. McKee said his group's work was originally focused on restoring oil production back to prewar levels-in the 2.4- to 2.6-million-barrel-per-day range. "Nobody knows the exact number for sure because there are actually no meters in the whole country." When he left the country in March, Iraq was producing more than 2.5 million barrels a day. He estimates the country has exported about 300 million barrels of oil and generated more than $8 billion of revenue for Iraq since operations resumed last June. A little more than $1 billion was spent in that pursuit, and about $1 billion more of supplemental funds will finish off the rest of this year. There was very little war damage done to the infrastructure, he said. Most of the money spent was to reverse the results of extensive looting. There are now 14,000 Iraqi guards protecting the assets. Replacing the entire oil infrastructure of Iraq-which has suffered greatly from underinvestment over the years-is estimated to cost between $30- and $50 billion, he said. There is not enough money for this to be done anytime soon-Iraq makes about $15 billion a year from oil exports, and that money is needed to run the country. "So, our whole approach has been to help the ministry think through what they are going to have to look like, how they are going to have to act, if you will, and what the rules of the game will be for outside investors," he said. -Jodi Wetuski
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