IRAQ. 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's oil production would reach 6.1 million barrels per day (bpd) by the end of this decade in a mid-point scenario, from current output around 3 million bpd.
That prediction would be half of that implied by Iraq's targets signed with foreign oil companies, and the IEA, which advises 28 industrialized countries, highlighted the risk of production rising more slowly than expected.
"This report anticipates movement towards possible trajectories for oil output lower than that implied by current contracts," the IEA said in its Iraq Energy Outlook published on Tuesday.
A senior Iraqi oil official said on Tuesday oil exports were expected to rise above 2.8 million bpd this month with shipments on the rise from both the north and south of the country.
Exports of 2.6 million bpd in September were already the highest in more than 30 years.
"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 supergiant southern oilfields are set to contribute about 2.4 million bpd of Basra crude to the export total while the northern oilfields are due to crank out around 450,000 bpd of Kirkuk, he said.
Crude oil exports from Kirkuk in the north have risen after Iraq's central government and the autonomous Kurdistan region agreed last month to end an oil payment dispute after the northern region pledged to continue exports.
Oil exports from Kurdistan have already risen to 170,000 bpd and will soon reach 200,000 bpd following the deal.
The Paris-based IEA warned that delays to investment in Iraq could tighten the global market in coming decades and push prices higher.
Industry executives say that while Iraq, holder of the world's fourth-largest oil reserves, has enough oil in the ground to hit its output target of 12 million bpd, infrastructure bottlenecks, red tape and bureaucracy make that unlikely by a contractual deadline of 2017.
The IEA's report also presented a delayed scenario, in which energy investment in Iraq rises only slowly from 2011 levels, leading to oil production of 4 million bpd in 2020 and 5.3 million bpd in 2035.
In this case, Iraq would face a US$3 trillion loss in national wealth due to lower oil export revenues and a failure of other industrial and services sectors to develop. Global oil prices would also be higher.
"These reach almost US$140 per barrel in 2035 in real terms, nearly US$15 higher than in the Central Scenario," the IEA said.
Iraq's oil production, which stagnated for years due to wars and sanctions, started to rise in earnest in 2010, after Baghdad secured contracts with companies such as BP Plc (BP.L), Exxon Mobil (XOM.N), Eni (ENI.MI) and Royal Dutch Shell (RDSa.L).