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.
“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.
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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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