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OPEC member Iraq oil output may affect future oil prices
Published on March 15, 2010 by oilprices · 2 CommentsOPEC is concerned that its grip on the global supply of oil is being threatened by the rising output of Iraq’s oil fields which could affect future oil prices.
Iraqi oil exports in February were at their highest for two decades, at an average of 2.08 million barrels per day, and the country plans to lift that to 2.15 million for the rest of the year.
According to the IEA, oil output from the country’s ageing infrastructure rose by 115,000 barrels per day to 2.54 million, the biggest single contributor last month to world oil supply growth.
Moreover, Iraq is starting to worry OPEC, whose members meet on Wednesday in Vienna to review production quotas. The relatively peaceful conduct of the Iraqi election and the signing of a clutch of contracts with foreign multinational companies, including BP, Shell and ExxonMobil, raises the prospect of a surge in Iraqi oil output over the next few years.
“There is only one issue, but it’s a tsunami: Iraq,” Leo Drollas, of the Centre for Global Energy Studies, said. With enough investment, Iraq has the potential to double or even triple its oil production. “If Iraq enjoys a period of stability, it could have a major destabilising effect on OPEC and the oil price.”
Tags: future, oil prices, OPEC, output, supply
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I suspect BP,Shell and Exxon will make sure Iraq production does not increase. If the above companies increase production in Iraq they get a max of $5/bbl. Their production in the rest of the world is many times their production in Iraq, so if they over produce from Iraq they drive the price down and come out with less money. I suspect they bid very low to get the contracts to prevent Iraq production.
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Its rubbish though. All these concerns from the IEA which was discredited by whistleblowers earlier in the year. The idea of Iraq’s output ‘surging’ forgets one very major point. DEPLETION.
Depletion rates shocked everyone when they went up from the expected 6% to over 9% last year.
Whereas Iraq can increase production over a number of years, its unlikely to even keep pace with world depletion figures.
Depletion curves accelerate, and take an 87millionbbls daily production rate, then take 9% of f of that, and its around 7.8million bbls a day lost, and the oil cannot be put on line quick enough to make up for those sort of figures, as the giant fields are no more.
Its oil ‘experts’ who don’t have a clue about oil or the effort required to bring it to the surface, and who conveniently leave out accelerating depletion rates.