Security problems and inadequate infrastructure after
decades of war and sanctions have depressed Iraqi output, which is still below
a peak of around 3 million bpd hit before the 1991 Gulf War.
The most conservative of the analysts polled pegged Iraqi
output at 2.5 million bpd by the end of 2011, while the most optimistic saw
production rising to 3.2 million bpd.
While that range is narrow, for the end of 2015 predictions
varied from 4 million bpd to 5.5 million bpd, a difference with potentially
major implications for the oil price.
The mean and median prediction of analysts polled was 2.8
million bpd for the end of 2011 and respectively 4.6 million bpd and 4.5
million bpd for 2015.
Barclays Capital has cautioned against excessive optimism
about rising output given the challenges.
Rather than give a year by year forecast, it predicted 3.5
million bpd by the end of 2014, but, citing political impasse and poor security,
said “there does appear to be a growing potential downside even to that
relatively downbeat forecast.” Saudi Arabia, the United Arab Emirates and
Kuwait were likely to remain for now the only three OPEC countries with
sufficient spare capacity to make a difference to the oil market at the margin.
“Iraq might well get there one day well into the future, but
the road ahead is a long and treacherous one,” the bank said in a note.
Oil firms that signed contracts last year to develop Iraqi
oilfields declined to give public comment on their progress.
Irish explorer Petrel Resources, which has been continuously
active in Iraq since 1999 and won a field development contract in 2005, even
before last year’s oil bidding rounds, also took a cautious view and gave only
tentative forecasts.
“Progress will happen, but slowly and more difficult than
expected,” said David Horgan, managing director of Petrel.
“The underlying output trend is slowly down — though there
are obvious, relatively easy improvements that should arrest this,” Horgan
said.
“We should get a couple of million barrels per day easily in
the next 3 years but the hyped numbers are unrealistic given the state of the
ministry, water for injection, infrastructure, security.” In view of all the
uncertainties, Samuel Ciszuk of IHS consultancy gave a range, predicting output
would reach between 3 million and 3.2 million bpd by the end of 2011 under his
most optimistic scenario and 5.5 million bpd by the end of 2015.
A “more realistic, but not pessimistic case,” said Ciszuk,
would place output at 3.1 million bpd at the end of next year and 4.5
million-4.6 million bpd by the end of 2015.
Oil Minister Hussain Al-Shahristani’s has said he expects 4
million bpd in three years’ time and that there is no need for Iraq — for now
the only OPEC member exempt from its system of output curbs — to have a
production target until then.
Iraq has already begun to position itself for a high limit,
however.
The contracts it signed with oil companies last year could
in theory take its oil capacity to 12 million bpd in seven years’ time, placing
it on a par with OPEC’s biggest producer Saudi Arabia, although for most the
goal remains hypothetical.
“The 12 million barrels is crazy,” Total CEO Christophe de
Margerie told reporters late last year. “We know there’s a potential to maybe
reach 7 to 8 million barrels some day and that alone would be a tremendous
success.” Earlier this month, Iraq pitched for an OPEC target second only to
Saudi Arabia’s when it raised its proven oil reserves figure by a quarter,
taking it above Iran, currently OPEC’s second biggest producer. But then Iran
raised its oil reserves figure back above Iraq’s and both countries have made
clear there could be further upward revisions.
The Organization of the Petroleum Exporting Countries, which
in the past, has used reserves estimates as part of its calculations of
individual production targets has so far managed to avoid potentially bitter
debate on realigning goals because the oil market has held firm and excess supplies
have been absorbed.
A faster-than-expected increase in Iraqi production or a
weaker-than-expected world economy could easily change that supply-demand
balance against the backdrop of great political uncertainty in Iraq and global
economic fragility.
A Reuters poll found oil demand next year would rise by 1.5
million bpd — half the peak demand growth of 3 million bpd in 2004, according
to the Paris-based International Energy Agency, adviser to industrialized
countries on energy.
