Iraq’s oil production is on course to more than double by 2020, the International Energy Agency said, although delays to investment could tighten the global market in coming decades and push prices higher.
In its Iraq Energy Outlook published on Tuesday, the Paris-based IEA said Iraq's oil production would reach 6.1 million barrels per day (bpd) by the end of this decade under its central scenario.
But that rate 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 report from 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, Exxon Mobil, Eni and Royal Dutch Shell.
Output has passed 3 million bpd for the first time in three decades. Iraq earlier this year overtook Iran to become the second biggest producer in the Organization of the Petroleum Exporting Countries, after Saudi Arabia.
Industry executives say that while Iraq, holder of the world's fourth-largest oil reserves, has enough oil in the ground to hit its 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 $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 $140 per barrel in 2035 in real terms, nearly $15 higher than in the Central Scenario,” the IEA said.