Iraq to play crucial role in global oil market - IEA

04 December 2012 10:10  [Source: ICIS news]

SINGAPORE (ICIS)--Iraq is set to play a pivotal role in the global oil market over the next few decades, accounting for 45% of the growth in crude production through to 2035, the International Energy Agency's (IEA) chief economist Fatih Birol said on Tuesday.

Iraq’s oil output in 2012 is 3m bbl/day, and the country is expected to double its output to 6m bbl/day by 2020, Birol said.

Birol was speaking at the Southeast Asia launch of its flagship "World Energy Outlook" publication in Singapore.

By 2035, Iraq is expected to produce more than 8m bbl/day of oil, he added.

"By the 2030s it becomes the second-largest global oil exporter, overtaking Russia," Birol said.

However, there are still some challenges to oil production in Iraq, with no immediate consensus between the Iraqi central government and regional governments on hydrocarbon revenue sharing, he said.

The country also faces technical difficulties in extracting crude from oil fields in the south, which accounts for about 80% of the country's overall production, because of the lack of water needed for crude extraction, according to Birol.

"If political consensus is achieved, the technical difficulties will cease because the country is projected to earn about $200bn a year and in 20 years time Iraqi GDP will equal the GDP of Saudi Arabia of today," he said.

Iraqi oil exports to Asia will increase in tandem to the surge in production, with shipments to the region expected to exceed 5m bbl/day in 2035, up from around 1m bbl/day currently, he said.

Looking at the wider region, almost 90% of Middle Eastern oil exports will be headed to Asia by 2035, Birol said, adding that North America's emergence as a net exporter will accelerate the eastward shift in trade.

"Resurgence in oil and gas production in the US is accelerating an ongoing shift in international trade towards Asian markets," he said.

"This is necessitating a greater focus on the security of strategic transport routes," Birol added.

By: Nurluqman Suratman

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