Tags: Iraq | Oil | crude | Output

Global Energy Panel: Iraq's Oil Output May Double by 2020

Tuesday, 09 Oct 2012 11:03 AM

Iraq's oil exports are expected to rise to their highest in decades this month and production is on course to more than double by 2020, as it cements its place as OPEC's second-biggest producer after Saudi Arabia.

The International Energy Agency said Iraq will provide the largest contribution to global supply growth in coming decades, and its production would reach 6.1 million barrels per day (bpd) by 2020 from around 3 million bpd now under what it called its central scenario.

That prediction would be half of that implied by Iraq's targets signed with foreign oil companies, and the Paris-based IEA highlighted the risk of production rising more slowly than expected, leading to higher global prices.

"This is much lower than the contracted projects and much lower than the Iraqi government's official targets," said Fatih Birol, the IEA's chief economist and the main author of the Iraq Energy Outlook, at a news conference in London.

"We think this trajectory is plausible when you look at the challenges in front of Iraq."

Industry executives have questioned whether Iraq can boost output to 12 million bpd by 2017, as called for under current contracts, due to a range of hindrances including infrastructure bottlenecks, red tape and bureaucracy.

The IEA, which advises 28 industrialized countries on energy, prepared its report in co-operation with the Iraqi government. A former Iraqi oil minister thought the IEA's central forecast was realistic.

"I think it is attainable and Iraq should be able to solve the problems related to water injection, storage and transportation pipelines," Issam Chalabi, who ran Iraq's oil industry in the 1980s, told Reuters.

"But the main challenge remains in finding new export outlets."

HIGHER EXPORTS

Iraq's oil production stagnated for years due to wars and sanctions, even though the country holds the world's fourth-largest oil reserves.

Output started to rise in earnest in 2010, after Baghdad secured contracts with companies such as BP Plc, Exxon Mobil, Eni and Royal Dutch Shell.

Production this year overtook that of Iran, traditionally the second-largest producer in the Organization of the Petroleum Exporting Countries whose exports have been curbed by sanctions over Tehran's nuclear program.

Iraq's exports of 2.6 million bpd in September were already the highest in more than 30 years and a senior Iraqi oil official said on Tuesday oil exports were expected to rise above 2.8 million bpd this month.

"I'm quite confident that if all goes well, exports will increase to at least 2.8 million," the official, who declined to be identified, told Reuters.

Iraq's southern oilfields are set to contribute about 2.4 million bpd of Basra crude to the export total in October while the northern Kirkuk oilfields are due to pump around 450,000 bpd, he said.

Exports from Kirkuk have risen after Iraq's central government and the autonomous Kurdistan region agreed to end an oil payment dispute.

The increase in Iraqi supplies this year had helped to keep a lid on oil prices as Western sanctions targeted Iran's exports and supply fell short from other regions, such as the North Sea.

But the IEA's report warned that, over the longer term, delays to investment in Iraq could tighten the global market and push prices higher.

Under a delayed scenario, in which energy investment in Iraq rises only slowly from 2011 levels, oil production reaches 4 million bpd in 2020 and 5.3 million bpd in 2035.

In this case, Iraq would face a $3 trillion loss in national wealth due to lower oil export revenues and a failure of other industrial and services sectors to develop.

Oil prices would also be higher, reaching almost $140 a barrel in 2035 in real terms, nearly $15 higher than in the central scenario, the IEA said.

"What happens is that the global oil markets will be set on a course for troubled waters," Birol said. "This would mean tightness in the markets and higher prices, which we think is not good news for the economy."

© 2017 Thomson/Reuters. All rights reserved.

1Like our page
2Share
Markets
Iraq's oil exports are expected to rise to their highest in decades this month and production is on course to more than double by 2020, as it cements its place as OPEC's second-biggest producer after Saudi Arabia.
Iraq,Oil,crude,Output
659
2012-03-09
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved