Iraq eyes 10 million bpd oil target despite IEA report

Iraq insisted on Wednesday its oil output could reach up to 10 million barrels per day by 2020, far higher than a prediction from the International Energy Agency which outlined several risks. The latest forecast from Iraq's deputy prime minister responsible for energy affairs, Hussein al-Shahristani, came as the IEA released its Iraq Energy Outlook report, forecasting Iraq's oil production to increase to 6.1 mbpd by the end of the decade but warning of factors impeding output growth. "Iraq is in a position to supply about half of global oil demand growth," Shahristani told officials, diplomats and reporters at a joint news conference with IEA Chief Economist Fatih Birol in Baghdad's Green Zone. "The conclusions of our studies, and those of independent consultants engaged in the ministry of oil, are that it is feasible and desirable for Iraq to raise its oil production to about nine to 10 million barrels per day by 2020. And Iraq can sustain that production for at least 20 years." Shahristani's prediction was a reassertion of forecasts that observers have long said is optimistic, with the IEA itself stating that in its "high case", production would reach 9.2 mbpd by 2020, and not rise to 10 mbpd until 2030. "In our central scenario, Iraq's oil production more than doubles to 6.1 mbpd by 2020 and reaches 8.3 mbpd in 2035," the IEA, which advises oil-consuming developed countries on energy policy, said in a report released on Tuesday. Iraq currently produces 3.4 mbpd of oil, and exports around 2.6 mbpd. The Paris-based organisation added that Iraq stood to gain almost $5.0 trillion in revenue from exporting oil up to 2035, as long as the country invested more than $530 billion on raising its energy output. But reaching such a high level of output "will require rapid, coordinated progress all along the energy supply chain," the agency stressed. Birol noted that the IEA's central scenario factored in "more modest growth compared to that of the government's targets" and noted it was unclear whether there would be sufficient global demand to accommodate Baghdad's goals. He also mooted a "delayed case" which he warned that not only was he afraid of, but "that we should all be scared of", whereby Iraq's oil production rose only to 4 mbpd by 2020 and 5.3 mbpd by 2035 as a result of continuing instability in the country's legal framework and a slow pace of investment. "This would have major implications unfortunately for Iraq... and plus, not only for Iraq, also for all of us here," he said, referring to assembled diplomats. "As a result of lower production coming from Iraq, global oil markets will be tighter... and we think, as a result of that, oil prices will be $15 higher (per barrel)." Delays to higher Iraqi oil and gas production could cost Iraq $3.0 trillion in lost revenues, according to the agency. Iraq has proven reserves of 143.1 billion barrels of oil and 3.2 trillion cubic metres (111.9 trillion cubic feet) of gas, both of which are among the largest in the world. Baghdad is looking to dramatically ramp up both production and sales in the coming years, bringing in much-needed cash to rebuild its conflict-battered economy.