Iraq has potential to play key role in world oil supply, says IEA

Iraq has the potential to become a "game-changer" for world oil markets in the coming decades provided that long-term strategies and a stable political and economic framework are guaranteed, the International Energy Agency (IEA) said Tuesday, reported dpa.

In a report released in London, the Paris-based agency said that Iraq could make "by far the largest contribution to global oil supply growth over the coming decades" and play a key role in global energy supplies.

The IEA says Iraq's current production of 3 million barrels a day could more than double by 2020 and reach 8 million barrels a day by 2035.

The agency sees Iraq becoming a "key supplier to fast-growing Asian markets, mainly China, and the world's second largest oil exporter by the 2030s, overtaking Russia," said the report.

It stressed that developments in Iraq's energy sector were "critical for the country's prospects and also for the health of the global economy."

However, success was not assured, said the report. "Failure to achieve the anticipated increase in Iraq's oil supply would put global oil markets on course for troubled waters," it warned.

Natural gas could play a much more important role in Iraq's future, it said. Once domestic needs were met, Iraq could also provide a cost-competitive source of gas supply to neighbouring countries, to European markets and to Asia.

The report said that meeting the anticipated levels of oil, gas and power supply over the period to 2035 would require more than 530 billion dollars in energy investment in Iraq.

It estimated the Iraq could gain almost 5 trillion dollars in revenues from oil export over the same period - an average of 200 billion dollars per year.

"Revenues of this magnitude can transform Iraq's future prospects, with the potential to stimulate much-needed economic growth and diversification," said the IEA.

But it added: "To achieve these ambitions, Iraq will need strengthened institutions and human capacity, a stable regulatory framework and sound long-term strategies for the energy sector, and efficient, transparent management of revenues and spending."