This
and other three texts below contain short summaries on the status
of the nation states that now have, and will in the future, the greatest
effect on oil prices. They have been kept separate from the body
of the report The
Future of Fuel Prices because they are essentially political
in nature.
The subject of Iraqi oil has been politically off-limits from
the day of the invasion, as if the reason for the invasion were to
take that oil by means of theft. Nevertheless, Iraq is the number two
nation in proven conventional oil reserves, and Iraq does continue
to produce oil and will continue to do so at an increasing rate.
Having been controlled by a war-mongering dictator for the last 30 years,
this nation has never been thoroughly explored. But since 2003 a fair
amount of seismic exploration has been done sufficient to raise predictions
that this nation probably has more oil than Saudi Arabia. While that
has yet to be proved, the fact remains that Iraq possesses enormous reserves
estimated (pre 2003) at 112 billion barrels, and certainly more than
that.
Iraq is currently producing at only half of existing capacity at 1.5
mb/d (million barrels/day). Her pre '03 production ran as high as 3.0
mb/d, but usually closer to 2.5 due to poor maintenance and management.
The pre war state of infrastructure is said to be poor and typical of
most oil nations run by dictators. In contrast, the current oil minister
claims that the nation is capable of 6 mb/d and has set that as a target.
However, only the northern Kurdish region is sufficiently secure for
any serious development to take place. For the foreseeable future, Iraq
must concentrate on defeating an insurrection.
As for Kurdistan, new developments are proceeding, including several
new wells coming on line plus repair and placing into operation of an
existing pipeline to Turkey capable of a half-million b/d. Every little
bit helps.
If the insurrection could be quelled today, Iraq could single handedly
solve the price problem and create a glut on the market within five years,
but no one is placing any bets on that happening. The best that can be
said at present is that the odds moderately favor the government getting
the upper hand since the vast majority of people do not want to see the
nation partitioned, and neither are they about to surrender it to the
likes of Al Qaeda or the Ba'athists. Contrary
to the notion of Americans stealing the oil, a Finnish company
is spearheading the efforts in Kurdistan. Though certainly
American companies will have the advantage Iraq-wide, a legal
system to deal with "who
gets and does what" is yet to created by the government. Thus,
though Iraq could up its production significantly in the near term,
the possibility of 6 mb/d remains just that.
Back
to The Future of
Fuel Prices
Posted
September 27, 2006
|
