The first American trade delegation to Iraq in three decades returned yesterday.
The U.S. senior envoy warned that if American companies wait for the country to become safe, secure, and less corrupt… the best opportunities will be gone.
He went on to scold: “The U.S. is already behind investments from Turkey and Syria and virtually tied with China in the total value of their exports to Iraq.”
His numbers don’t take into account defense contracts. So it is no wonder that those who share borders, language, and culture with Iraq are getting the jump on non-connected, private U.S. companies…
Fuggedaboutit
And let’s not forget that the U.S. has been known to enforce its laws against bribery and kickbacks when dealing with foreign powers.
The truth is that the time to invest in Iraq was about six years ago.
I recommended Heritage Hydrocarbon when it was the first foreign oil company exploring in the semi-autonomous region of Kurdistan. That stock went up more than 1,500% before merging with another company to become Heritage Oil (HOIL.L).
But don’t get me wrong — there are still plenty of opportunities in Iraq…
27 billion barrels of new oil
On Monday, Iraq claimed it had much more oil than it had previously reported. New data puts oil reserves at 143.1 billion barrels of oil — that’s up from 115 billion barrels the country had one week prior.
My good friend Keith Kohl has written in this space before about the global one-upmanship in oil reserves that happened over the past 20 years among OPEC countries.
Some oil ministers have a way of creating paper oil out of thin air. But Iraq is different.
You have to remember that this country was at war with Iran; then under embargo; then at war with the United States and her allies for the better part of the last thirty years.
There was very little exploration of oil in that time — and none using modern seismic equipment.
Iraq could have the second largest reserves in the world, as they claim.
The new figures mean that Iraq is officially number two behind Saudi Arabia (264.9 billion barrels) and ahead of Iran (137.01 billion barrels).
Knowing the skepticism the petroleum world has toward number revisions, Iraqi Oil Minister Al-Shahristani said:
These aren’t random figures, rather they were the results of deep surveys carried out by the ministry’s oil reservoir company and international companies which signed contracts with Iraq. Most of these figures were the result of surveys conducted by these international companies, especially at oil fields such as West Qurna and Zubair.
According to Rigzone.com, Iraq has signed 12 deals with international oil companies to ramp up output capacity to about 12 million barrels a day from the current ~2.4 million barrels a day.
BP, Exxon Mobil, Shell, Lukoil, Eni, Total, Japan Petroleum Exploration, and China National Petroleum Corp. (CNPC) have contracts to develop Iraqi oil.
The largest oil field is West Qurna, which has proven oil reserves of 43 billion barrels — putting it right behind the famed Ghawar under the Saudi desert.
Exxon Mobil is leading the group to develop the West Qurna field.
Black gold oasis in Kurdistan
None of these official Iraqi figures count the more than 40 billion barrels of oil located in the Kurdistan region of Northern Iraq — nor can you make real money buying the likes of Exxon Mobil, BP, or CNCP.
Sure, I expect they will double or even triple over the next two years…
But if you want to make real money, you have to get in early on the little guys like Gulf Keystone. Gulf Keystone saw 3,100% gains in 13 months!
The stock boomed from $5 to $160:
Gulf Keystone was a small explorer in Algeria before picking up contracts in the world-class oil region of Kurdistan.
The company jumped because they struck oil.
And it recently put out a positive update: A well in the Shaikan Block shows that operations are well on track to reach the previously announced year-end target production rate of 8,000 to 10,000 barrels of oil per day.
And that’s just to start…
Perhaps that doesn’t sound like a lot of oil. But it does to a small exploration company.
And buying the wildcatters with the best prospects is how you make money in the oil game — big money.
You get in early in places the big boys fear to tread.
That’s how my readers booked massive profits on my Heritage, Tullow, and my current Mongolian recommendations, among others…
I have several new buys off the coast of Guyana, Israel, and in the East African rift. These are companies where a discovery of 100 million barrels will get you a ten-bagger.
Falling dollar equals big oil profits
We are in an investing situation in which the Fed has actually stated that they are going to destroy the value of the dollar.
Not only will this lead to inflation — it already has. You can see it in the price of gold and food.
Oil always goes up in inflationary environments.
Add to that the fact that all the easy oil has been found — which is why BP is drilling in the dangerous wilds of Iraq — and emerging market demand for energy keeps going up…
And you have to put some wildcatters in your portfolio.
Sincerely,
Christian DeHaemer
Energy & Capital
