Energy Costs & Savings
Iraq Oil Boom on the Horizon
Seven years after Saddam's fall, Iraq’s government is finally able to plan the development of new oil fields.
By Jim Ostroff, Associate Editor, The Kiplinger Letter
March 10, 2010
Iraq is on the cusp of a major expansion in its oil output that within five years may well make it the world’s third largest producer, behind only Saudi Arabia and Russia. Recent relative political and military stability is letting Iraq’s government pursue development of new oil fields that are expected to more than double the country’s production, to 5 million barrels a day, by 2015. That will catapult Iraq from its position as the ninth largest producer past neighboring Iran as well as Mexico, the U.S. and Canada, among others.
Within a dozen years or so, Iraq could be among a troika of oil producing titans, each pumping more than 10 million barrels of oil a day. Russia and Saudi Arabia will reach that mark by 2015, increasing their current production by about 20%. It’s also possible that by the early 2020s, Iraq may export more crude oil than Russia.
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“There are 74 identified oil fields in Iraq, but only 15 have been developed. So there is the potential to produce several times the current 2.5 million barrels of oil a day,” says Amy Myers Jaffe, an energy study fellow at the James A. Baker III Institute for Public Policy.
This oil boomlet will help to keep a lid on oil prices. “The additional oil will maintain a supply cushion of several million barrels a day. That will be very important for mitigating oil demand surges when world economies pick up again,” says John Kilduff, a partner in Round Earth Capital, a commodities trading firm. Ample supplies also will help soften oil price flare-ups should there be supply disruptions in Nigeria, where civil strife threatens crude exports, or if hurricanes crimp U.S. production.
It will be a boon for a range of U.S. companies: ExxonMobil, ConocoPhillips and Occidental Petroleum are among those that will help develop Iraq’s oil fields, in addition to Royal Dutch Shell, British Petroleum, Statoil and other foreign oil companies. Plus, American firms such as Bechtel, Halliburton, Schlumberger, Foster Wheeler, Fluor, Baker Hughes and KBR, which are leaders in engineering, exploration, drilling, equipment and oil field services, can count on a steady stream of work for years.
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Reader Comments (6)
Posted by: Joe Honick at 03/10/2010 07:00:22 PM
How utterly fascinating and totally expected and at the cost of only about several thousand American lives and hundreds more NATO forces, not to mention the tens of thousands of Iraqis who got in the way during the past several years, What is missing from this boon to oil companies and very specific Iraqis is why we are not expecting them to draw down from those oil profits to pick up some of the trillion dollar tag we put out just so far to help them get to this point.
Posted by: jack at 03/10/2010 09:02:16 PM
thank god our children did not die for oil royal oil interests...OOPS!
Posted by: Curious at 03/11/2010 04:50:32 PM
If you ... think, even for an infinitessmal second, that the entry of Iraq, into the oil market will DECREASE the price of crude, I have a piece of real estate I would like to sell you.....
Posted by: Uncle Sam at 03/11/2010 06:06:15 PM
Recent relative political and military stability? Did not 40+ voters just get bombed attempting to vote? I don't recall this occurring in the US during the last presidential election, starting with George Washington. Within a dozen years or so, Iraq could be among a troika of oil producing titans? Even Nostradamus got a few things right over a few thousand years. I wonder if Mr. Ostroff been to Iraq?
Posted by: Joshua at 03/11/2010 11:21:50 PM
I served in Iraq for 3.5 years total, and am glad to have provided freedom to those less fortunate. I pray that 200+ years from now, an Iraqi will be just as blessed as I have been in mine.
Posted by: Artimus at 03/15/2010 01:29:09 PM
"Posted by: Curious at 03/11/2010 04:50:32 PM If you ... think, even for an infinitessmal second, that the entry of Iraq, into the oil market will DECREASE the price of crude, I have a piece of real estate I would like to sell you....." Actually, due to the laws of supply and demand, I do think that Iraq's increased production of oil will have a lowering pressure on oil prices. And no I do not wish to buy your real estate. :)