NEW DELHI (TIP): Iraq, which is set to become one of the major oil producers in the world, could also become India’s strategic energy partner, International Energy Agency’s (IEA) Chief Economist Fatih Birol said. Speaking to Business Line after the release of IEA’s report on ‘Iraq Energy Outlook’ Birol said Iraq’s role in the global oil market was growing rapidly. Currently, half of Iraq’s oil exports go to Asia. This situation will change by 2020, when exports to Asia will account for 80 per cent of Iraq’s oil exports. Two major oil importers in Asia – China and India – will have the largest share by end of this decade. Today, Iraq produces three million barrels a day of crude oil and, according to IEA’s Iraq Energy Outlook, the country’s oil production is expected to grow by over 5 million barrels a day to 2035, he said. Incidentally, Iraq recently replaced Iran as India’s second largest crude oil supplier.
According to IEA Iraq Energy Outlook, by 2020, crude oil production is expected to more than double to 6.1 million barrels a day to reach 8.3 million barrels a day by 2035. Birol said by 2020, China will account for almost 2 million barrels of oil a day sourcing from Iraq, while India will be getting close to 1.5 million barrels a day. Twenty years down the line, Iraq will have reached GDP levels of what Saudi Arabia is today, he said. On whether Iraq will be able to meet the demand shortfall created due to geo-political issues in Iran, he said, “Iraq will be able to sustain it, because it has vast and low-cost oil resources. Iraq is on its way to become the second largest exporter of oil globally.
The largest exporters today are Saudi Arabia, followed by Russia.” Asked if the flush of oil from Iraq will result in bringing down prices, Birol said, “If Iraq is able to sustain the developments, then it will.
But, if it remains lower than expectations or developments weaken due to any kind of political uncertainty, the prices may be $15 a barrel higher than expected in 2035.” International crude oil prices are well over $105 a barrel today. On becoming a gas supplier to the world, Birol said natural gas could play a more important role in Iraq’s future for its power generation. He said there was a huge potential for Indian companies to invest in Iraq in not only oil and gas exploration but also in areas such petrochemicals, IT, engineering and infrastructure. The overseas investment arm of ONGC, ONGC Videsh Ltd, is the sole licensee of Block-8, a large on-land exploration Block in Western Desert, Iraq. The company is currently renegotiating the contract with Iraq.