Thursday, November 4, 2010

IEA Sceptical of Iraq Oil Increases

According to the Financial Times, which apparently obtained a draft of the next World Energy Outlook:
Iraq will miss its target of producing 12m barrels of oil a day by 2017 and could take another 20 years to achieve even half that level of output, says the International Energy Agency.

In a draft of its annual World Energy Outlook report, the IEA gives a downbeat assessment of Iraq’s ambitions. However, it predicts its crude oil production will overtake that of neighbouring Iran “by soon after 2015”.
Certainly some scepticism as to the schedule and plateau level is in order. Whether this much, I'm not sure - a lot is uncertain.  A number of big oil companies are going to lose a lot of money if things go as the IEA predicts.  It will be interesting to see the detailed reasoning when the report is published.

Past coverage of Iraqi oil issues is here.


James said...

A lot of big oil companies will lose a lot of money - but only if they have been investing a lot of money. I for one have long been skeptical that they would invest the amounts of money they said they would as long as the political and security situation in Iraq is in great flux.

Perhaps the IEA projections are based on assumptions that the big oil companies are not going to invest as much capital as they said they would. Perhaps the IEA even has inside information about that. Or perhaps I am completely wrong.

But if I were an oil executive, I would be playing it safe - especially after reading stuff like this:

Greg said...

It's difficult to reconcile this new claim by the IEA (if such it be) with their 2008 prediction of a global supply shortfall in 2013-2014. That, I'd have thought, would tend to weaken or eliminate OPEC's quota system. So five or six million barrels per day by 2020-ish would seem more likely, even taking into account the fractious politics in and around Iraq.

> a lot is uncertain.

Yes. One thing seems very likely, though: China looks set to increase its influence in Iran and Iraq; all the more so if it delivers on its oilfield upgrades, while the IOCs don't. Slowly and surely Iran and Iraq are being drawn into the East Asian trading bloc.