Iraq Taps Its Oil Riches, But Risks Deter Big Investment
June 19, 2012
by Henry Ridgwell
LONDON - Nine years after the U.S.-led invasion, the Iraqi government says the country is emerging as a global energy giant. A conference in London has brought together leading figures from the government and the oil industry to try to boost investment in Iraq. But, several risks remain - not least the growing instability in some of Iraq's neighbors.
Iraq's government says recent explorations show the country could be sitting on the world's largest oil reserves at up to 350 billion barrels.
The figure is unproven, but many agree that Iraq has huge untapped potential.
The Iraq Petroleum 2012 Conference in London (June 18-20) brought together Iraqi government and industry figures. Among them was Bayazeed Hassan Abdullah, an Iraqi lawmaker and member of the parliamentary Oil Committee.
"By the end of 2017, Iraq can produce 12 million barrels a day," he said. "And also it has a huge gas (potential) in Iraq because each barrel, when extracted, it is accompanied with 600 cubic feet of gas."
Among the speakers at the London conference was Tony Hayward, the former chief executive of BP, who left the company following the Deepwater Horizon oil spill. He now runs Genel Energy, the largest oil producer in northern Iraq.
"Across Iraq today, there's a desperate need for significant new infrastructure to allow the country to truly emerge on the world stage as a major supplier of oil and gas to the world," he said. "Perhaps more importantly, to provide a growing quality of life for the citizens of Iraq."
After decades of war and sanctions, Iraq's oil and gas infrastructure lags behind other leading exporters.
Exxon and other foreign oil giants have signed deals to develop wells and pipelines, but experts say Iraqi politics is holding back overseas investment.
Paul Stevens is with the independent policy institute Chatham House.
"They're going to have to get a petroleum law passed to allow the international oil companies to come in on a risk-taking basis rather than as service companies," he said.
Analysts highlight other risks, notably ongoing sectarian violence.
The northern semi-autonomous region of Kurdistan stopped oil exports to Baghdad earlier this year in protest over non-payment. Iraq lies at the heart of a region undergoing huge political upheaval - and shares borders with Syria and Iran.
Iraq's former National Security adviser, Mowaffak al-Rubaie, spoke at the London conference.
"Now all politics are regional and maybe even global," he said. "Anything happening in Syria, Egypt, Yemen, and the list goes on and on, it will affect Iraq."
Despite the risks, Iraq exported more than 2.5 million barrels a day in April, more than at any time since the 1980s.
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