The development of Iraq’s energy sector can make a major contribution to the stability and security of world energy markets and will be critical to the “health of the global economy”, the IEA said in a report on Tuesday.
An Iraqi oil boom is likely to see the country’s production surge, more than doubling from current levels of 3m barrels per day (bpd) by 2020, and hitting 8mbpd by 2035. The country will make “by far the largest contribution to global oil supply growth over coming decades”.
However, the IEA warned that success is not assured and some $530bn (£332bn) of energy investment in the country will be needed.
“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,” it said.
Iraq stands to gain an average of $200bn a year in revenues from oil exports, which would “transform Iraq’s future prospects”.
“This report shows that we all have an interest in Iraq realising its potential and revitalising its economy,” IEA executive director Maria van der Hoeve said.
The IEA report was released on the same day that Russian energy minister Alexander Novak acknowledged the changing shape of global energy markets as a result of the shale gas boom in the US - and appealed to London investors to help Russia develop its own resources.
Russia has tended to talk down the global potential of shale gas, which is seen a threat to Russia’s own dominance in gas markets.
But on Tuesday Mr Novak said he believed that the boom would result in the US and Canada both emerging as significant exporters on the world liquefied natural gas market by the end of this decade.
He also told a London conference that the Russian government was considering a range of measures to encourage foreign investment in the country’s energy sector, including new incentives and “possible mechanisms” to allow private investors to take stakes in Russian organisations.
He told reporters this amounted to a “considerable change of the government’s approach in order to enable the development of those reserves that are today not quite profitable” - such as those deeper underground and offshore in the Russian Arctic.
Russia is seeking $1 trillion investment in its energy sector this decade. Mr Novak met a series of institutional investors and oil companies - understood to include BP - on Monday and Tuesday to tell them about Russia’s “change in attitude” and to “present opportunities for investment”.
BP is currently in talks to sell its 50pc stake in Russian venture TNK-BP, while its oligarch partners AAR announced on Monday that they too might sell their stake, potentially via a flotation.
Mr Novak said that any moves for foreign investors to buy into TNK-BP, such as through an initial public offering, would require government approval.
However, he added that no proposals had yet been submitted to the Russian government over the venture’s future.
original source: http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9597368/Iraq-will-be-worlds-second-largest-oil-producer.html