* Iraq oil official sees 2.8 mbpd Oct exports
* IEA output forecast warns of investment delays
* Delays could lift global oil prices more
By Alex Lawler and Peg Mackey
LONDON, Oct 9 Iraq's oil exports are expected to
rise to their highest in decades this month and production is on
course to more than double by 2020, as it cements its place as
OPEC's second-biggest producer after Saudi Arabia.
The International Energy Agency said Iraq will provide the
largest contribution to global suppply growth in coming decades,
and its production would reach 6.1 million barrels per day (bpd)
by 2020 from around 3 million bpd now under what it called its
That prediction would be half of that implied by Iraq's
targets signed with foreign oil companies, and the Paris-based
IEA highlighted the risk of production rising more slowly than
expected, leading to higher global prices.
"This is much lower than the contracted projects and much
lower than the Iraqi government's official targets," said Fatih
Birol, the IEA's chief economist and the main author of the Iraq
Energy Outlook, at a news conference in London.
"We think this trajectory is plausible when you look at the
challenges in front of Iraq."
Industry executives have questioned whether Iraq can boost
output to 12 million bpd by 2017, as called for under current
contracts, due to a range of hindrances including infrastructure
bottlenecks, red tape and bureaucracy.
The IEA, which advises 28 industrialised countries on
energy, prepared its report in co-operation with the Iraqi
government. A former Iraqi oil minister thought the IEA's
central forecast was realistic.
"I think it is attainable and Iraq should be able to solve
the problems related to water injection, storage and
transportation pipelines," Issam Chalabi, who ran Iraq's oil
industry in the 1980s, told Reuters.
"But the main challenge remains in finding new export
Iraq's oil production stagnated for years due to wars and
sanctions, even though the country holds the world's
fourth-largest oil reserves.
Output started to rise in earnest in 2010, after Baghdad
secured contracts with companies such as BP Plc, Exxon
Mobil, Eni and Royal Dutch Shell.
Production this year overtook that of Iran, traditionally
the second-largest producer in the Organization of the Petroleum
Exporting Countries whose exports have been curbed by sanctions
over Tehran's nuclear programme.
Iraq's exports of 2.6 million bpd in September were already
the highest in more than 30 years and a senior Iraqi oil
official said on Tuesday oil exports were expected to rise above
2.8 million bpd this month.
"I'm quite confident that if all goes well, exports will
increase to at least 2.8 million," the official, who declined to
be identified, told Reuters.
Iraq's southern oilfields are set to contribute about 2.4
million bpd of Basra crude to the export total in October while
the northern Kirkuk oilfields are due to pump around 450,000
bpd, he said.
Exports from Kirkuk have risen after Iraq's central
government and the autonomous Kurdistan region agreed to end an
oil payment dispute.
The increase in Iraqi supplies this year had helped to keep
a lid on oil prices as Western sanctions targeted Iran's exports
and supply fell short from other regions, such as the North Sea.
But the IEA's report warned that, over the longer term,
delays to investment in Iraq could tighten the global market and
push prices higher.
Under a delayed scenario, in which energy investment in Iraq
rises only slowly from 2011 levels, oil production reaches 4
million bpd in 2020 and 5.3 million bpd in 2035.
In this case, Iraq would face a $3 trillion loss in national
wealth due to lower oil export revenues and a failure of other
industrial and services sectors to develop.
Oil prices would also be higher, reaching almost $140 a
barrel in 2035 in real terms, nearly $15 higher than in the
central scenario, the IEA said.
"What happens is that the global oil markets will be set on
a course for troubled waters," Birol said. "This would mean
tightness in the markets and higher prices, which we think is
not good news for the economy."