Home > Uncategorized > Will Iraq’s energy boom postpone peak oil yet again? – Telegraph Blogs

Will Iraq’s energy boom postpone peak oil yet again? – Telegraph Blogs

October 10, 2012 Leave a comment Go to comments

Well, here is a shocker for the peak oil camp.

Iraq’s oil output will more than double from 2.6 million to 6 million barrels a day (b/d) by the end of the decade. This is 45pc of world oil supply growth over these years.

It will reach 8 million b/d by 2035. By then, Iraq will have overtaken Russia to become the world’s second biggest oil exporter – supplying China with 2 million b/d in a modern marine revival of the silk trade – and earning $200 billion a year in revenues.

It will also be a major gas exporter.

That is the conclusion of a special report by the International Energy Agency on Iraq released this morning.

As a signed-up member of the cheap peak oil club – not quite the same as peak oil – I am watching this with great interests.

As the IEA says, this will require $530 billion of new investment. “The obstacles are formidable: political, logistical, legal, regulatory, financial, lack of security and insufficient skilled labour,” it said.

Good luck to the Iraqis. Let us hope that they – with the help of BP, Shell, Exxon, et al – can pull it off.

They would eclipse Iran and transform the strategic balance of power within the Middle East – hopefully for the better, though one never knows.

But right now they have a civil war on one border, a nuclearist, stone-hurling, clerico-Fascist with hyperinflation on a second border, and a near breakdown in relations with Kurdistan inside the country. They have not even passed a hydrocarbon law.

The IEA has long warned that the world faces a horrendous energy crunch before long as the industrial revolutions of Asia come of age, with China alone adding 20 million cars a year already.

Iraq may help to plug part of the gap – with great help from North American shale oil and gas, and perhaps Chinese shale in the future – but I doubt that it will alleviate the full strain.

For now, note that Brent crude is trading at $113 even though Europe is stuck in slump, much of Asia has slowed sharply and is in a quasi-recession, and the US is so weak that the Fed has just launched QE3.

The implication is that the equilibrium price of Brent in a healthy global economy is likely to be near $150, and perhaps $200 in the late phase of a global expansion (assuming that such a shock does not kill the boom first).

Many readers on this thread are very well informed on the energy markets, so I leave it to you to parse the details of this IEA report while I return to Greece’s love affair with Angela Merkel.

Will Iraq actually deliver?

via Will Iraq’s energy boom postpone peak oil yet again? – Telegraph Blogs.

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