Iraq may be world's top oil producer

[Neo]

Iraq may be world's top oil producer

20 April 2007

DUBAI — Iraq's oil reserves could be twice as great as was previously thought. Iraq has known reserves of 116 billion barrels and could be sitting on potential reserves of a further 100 billion barrels, according to a study by Texas-based energy analysts, IHS. If confirmed, Iraq could overtake Saudi Arabia as the world's top oil producer.

Iraq's oil reserves are significantly untapped and daily production could be doubled within five years, the study said. Current output of two million barrels a day is lower than in early 2003, when three million barrels were being pumped, and almost half that being produced in 1979. Iraq has the capacity to increase production to four million barrels by 2012, if international investment begins to flow, with the capacity to further increase that to six million within time, according to IHS estimates.

The study is considered the most comprehensive independent analysis of the country's resources since the US-led invasion in 2003. It is based on data collected in Iraq before and after the invasion, showing the oilfield's reserves and production history. Its estimate is based on analysis of geological surveys.

IHS' president and chief operating officer, Ron Mobed, described Iraq's reserves as "phenomenal", adding that they represented a "gold star opportunity." "Obviously the security situation is very bad, but when you look at the sub-surface opportunity, there isn't anywhere else like this. Geologically, it's right up there, a gold star opportunity."

He stressed that the security situation needed to improve dramatically if the foreign investment necessary to improve the country's infrastructure was to materialise. "Obviously, the security situation is very bad. But once the infrastructure is in place, the oil will come out of the ground quite cheaply", said Mobed. IHS estimates that production costs are less than $2 a barrel.

Of Iraq's 78 oilfields identified as commercial by the government, only 27 are currently producing. A further 25 are not yet developed, but are close to production. Another 26 are not yet developed and are far from production. The study found that Iraq's two main oilfields, at Kirkuk in the north of the country and Rumaila in the south, were operating below capacity.

Earlier this year, the Iraqi government agreed a draft law for how its oil wealth would be shared among ethnic groups, seen as crucial to encouraging new investment.

The proposed law is due to be considered by the Iraqi parliament shortly, although the Kurdish region rejects some of the proposals.

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