In a new report issued today, the International Energy Agency (IEA) declares that "Iraq's energy sector holds the key to the country's future prosperity and can make a major contribution to the stability and security of global energy markets." It's hard to argue with the first part of that sentence, but the second part includes a lot of "ifs."
Iraq believes that it can ramp up production from about 3 million barrels a day currently to a staggering 15 million barrels a day in a decade. The IEA, taking a more cautious approach, thinks that 8.3 million barrels a day by 2035 is the most likely scenario.
To reach the IEA total the country will need to attract investment totaling $530 billion over the next decade, a little more than 10% of the projected total value of $5 trillion for the country's expected production. Currently the level of investment is about $9 billion annually, which the IEA says needs to grow to $25 billion a year if the country is to reach production of 8.3 million barrels a day.
Under the IEA's central scenario, Iraq accounts for 45% of anticipated oil production growth in the current decade and by the 2030s, the country will export more oil than any country except Russia.
There are hurdles of course. Contested contracts issued by the semi-autonomous Kurdish region of Iran are just one of those hurdles. Another is the country's lack of adequate power generation, much of which still depends on oil for fuel. The report notes:
How this works out in practice will be determined by the speed at which impediments to investment are removed, clarity on how Iraq plans to derive long‐term value from its hydrocarbon wealth, international market conditions and Iraq's success in consolidating political stability and developing its human resource base.
An executive summary of the IEA report is available here.