A former UK envoy to Iraq this week said that initial hopes of foreign investment turning Iraq into a major oil supplier were "too optimistic" and that the industry is likely to remain starved of new capital until late-2005. Jeremy Greenstock, in an address made during this week's Asia Oil & Gas Conference in Kuala Lumpar, said that the elections scheduled for next year need to be followed by a more suitable security environment before investors get off the sidelines.
Greenstock acknowledged that Iraq has the potential to more than double its current production of 2.5 million barrels of crude per day to reach as many as six million, but that as much as €16.6 billion in foreign investment is needed in the next few years just to reach four million barrels per day.
“If it were not for the violence, we could be optimistic about Iraq,” said Greenstock, who was the UK’s UN ambassador before becoming the number two administrator in Iraq, a position he stepped down from recently.
“I think security is going to be a problem throughout this transitional period. There will be violence during the elections.” Greenstock noted that Iraq has proven reserves at 112 billion barrels of oil, with probable reserves estimated at more than 200 billion barrels. “Iraq stands second only to Saudi Arabia as a sustained supplier of oil to world markets for the next century,” he said. “But potential investors will watch closely how Iraq develops the industry’s framework.”
He expressed regret that coalition forces had not established security in Iraq more swiftly after last year’s invasion, saying there was “a vacuum in security developments in the weeks after the war was over” that contributed to today’s violence.
However, Greenstock downplayed suspicions that Washington wants to control Iraq’s oil industry, and urged the creation of a new national oil company to oversee rebuilding of Iraq’s refineries, which were “old, inflexible and in need of urgent modernisation or replacement.”
Source: Asia Times
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