As the United States and Britain press for a war against Iraq, energy experts meeting here believe the energy map of the Middle East and beyond will change depending on the outcome of any conflict.
The long-term outlook of global petroleum supply and the fate of many oil and gas export projects in the Middle East and Central Asia ”depend on whether Iraq would return with its full potential to the market,” said Naji Abi Aad, consultant at the France-based Mediterranean Energy Observatory.
A lifting of the 12-year-old sanctions imposed by the United Nations on Iraq would open the way for the development of its 115-billion-barrel oil reserves, the world’s largest after Saudi Arabia, he added at the Oil and Gas Pipelines in the Middle East Conference that closed Tuesday.
”One would reasonably guess that Iraq will then seek to export as much as possible for the needs of reconstruction, and therefore oil prices in the long run will drop,” he said. Low prices will in turn make petroleum development projects in the Caspian Sea region less attractive as they require massive investment in export pipelines for their oil or gas to reach the markets, he argued.
Political instability in the Middle East has been the main driving force behind the search by Western energy consumers for alternative suppliers of its oil, and the development of costly projects in the Caspian. Iraq’s current oil production, authorised under the UN oil-for-food programme, runs at less than two million barrels per day (bpd). Its production peaked at 3,5-million bpd before the 1980-1988 war with Iran.
In the gas market, Iraq could become a tough rival for Iran as a source of supply to Turkey, and could also consider opening its territory for a pipeline to carry gas from Qatar to Turkey and on to Europe, in return for transit fees, said experts.
”Depending on the outcome of an attack on Iraq, we will have a different picture” concerning pipelines, Bijan Khajehpour, director of Iran’s Atieh Bahar energy consultancy firm, told the conference.
UN sanctions have prevented a consortium made up by Gaz de France and Italy’s AGIP from building a pipeline connecting five northern Iraqi gas fields to Turkey, a project that the two countries agreed on in December 1996.
Another constraining factor for the French-Italian team is that several of the fields lie in an area under the control of Kurdish rebel groups. Giacomo Luciani, a professor at the Italy-based European University Institute, said Qatar could aim to become, thanks to Iraq, one of Europe’s gas suppliers, competing with Algeria, Egypt, Iran, Norway and Russia.
Qatar, which has the world’s third largest gas reserves after Russia and Iran, expects to commission its pipeline to Kuwait in early 2006, and this facility could be extended through Iraq to Turkey and then hook up with the European gas grid in Greece, he said.
”In one way or the other, the embargo on Iraq will be lifted and this will create new opportunities for the Gulf Arab countries, providing them with a shorter route to Turkey and Europe,” Luciani said.
Iran started in December 2001 pumping gas to Turkey through a pipeline and three-party negotiations have been held with Athens to extend the facility to Greece. Egypt is expected to start shipments of liquefied natural gas by tanker to Spain in 2004 and France in 2005, and has plans to supply Cyprus and Turkey via Jordan and Syria through a regional grid under construction.
Abi Aad also floated an idea to reactivate an old pipeline to supply Kuwait with Iraqi gas, a ”reconciliation measure” to end the bitterness of Iraq’s August 1990 — February 1991 occupation of the emirate.
”We might see interesting things in the coming months,” said Luciani. – Sapa-AFP