Iraq's ambitious oil goals questioned by experts

13th October 2010, Comments 0 comments

War-torn Iraq may recently have unveiled a surge in oil reserves, as it bids to bolster its standing in the world energy market, but experts wonder if it can really meet its ambitious production aims.

Iraq -- where the Organisation of the Petroleum Exporting Countries (OPEC) was founded in 1960 -- depends on crude oil exports for 95 percent of government revenue and is trying to spur economic growth.

In recent decades, it has been hampered by war, international sanctions and weak investment in the sector under executed dictator Saddam Hussein.

This month, Iraq announced that its proven reserves now stood at 143.1 billion barrels, a 24 percent increase on the previous figure, pushing it past neighbour and historic rival Iran.

Iran hit back within days, claiming in turn that its proven reserves had also risen to 150.31 billion barrels, again pushing it past Iraq.

Production levels in Iraq -- the only member country without a production quota due to unrest -- are likely to provoke discussion at OPEC's meeting on Thursday in Vienna.

Some experts have questioned the methodology behind the new Iraqi amount.

And there was scepticism about its target of reaching up to 12 million barrels per day within six years from a current level of 2.3 million among big names in the industry at this week's Oil & Money 2010 conference in London.

Although Iraq last year awarded contracts to foreign firms to exploit ten oilfields, experts highlighted concerns including security, weak finances and technical difficulties.

"I will cut off my hands if Iraq can provide 12 million barrels per day in export facilities," said Issam al-Chalabi, Iraqi oil minister between 1987 and 1990.

"Six million barrels per day? Yes, maybe, but 12? It's totally impossible."

Sadad al-Husseini, a consultant and a former vice-president of oil giant Saudi Aramco, added: "A best case estimation of 6.3 million barrels per day is achievable in six or seven years but without security, none of these could be achievable."

Even if it does not meet its own ambitious goals, though, Iraq looks set to play an important role in boosting global output.

"Iraq is one of the largest game-changers (for the oil market)," said Nobuo Tanaka, executive director of the Paris-based International Energy Agency.

"It will be a very important element for future supply... we will need it, it will be a great help, as we face elsewhere depletion of oil fields."

Peter Wells of Neftex Petroleum Consultants added there was "nothing like Iraq left in the world" -- but also sounded a note of caution on the technical side.

"The three main reservoirs need gas or water injections to give some volume to the production ... Most of the oil is in 'poor' reservoirs," he said. "Nobody can spend this kind of money that quickly, especially in Iraq."

© 2010 AFP

0 Comments To This Article