The Iraqi oil agreements with international companies raise many questions. But this is natural, given the fact that these oil field development agreements intend to raise oil production capacity from its current level of 2.5 million barrels per day to about 12 million barrels per day by 2017. Without any exaggeration, these forecasts issued by the Iraqi Oil Ministry and international oil companies are the single most important event for the global oil industry. As for Iraq, its annual oil revenues may increase, as a result, from 70 billion dollars [at present], to about 200 billion dollars, assuming that the price levels will stabilize in their current range of 70 to 85 dollars per barrel. The 12 long-term service agreements of 2009 raised many questions within the segments of the oil industry, in particular with regards to the possibility of implementing them on schedule. These questions and doubts have largely been confined to oil experts so far. However, what added fuel to the debate recently is an article published by the renowned U.S strategic expert Anthony Cordesman, published on the occasion of the withdrawal of the majority of U.S ‘combat' troops from Iraq. Cordesman cited the information of the U.S Department of Energy on the future energy production capacity of Iraq, which are in complete contradiction with the figures released by the Iraqi Oil Ministry and its partnering international companies, in that they indicate that Iraq can barely achieve a small fraction of what has been agreed upon. What are the predictions of the U.S Department of Energy then? The oil production capacity of Iraq will reach around 2.6 million barrels per day in 2015, 3.1 million barrels in 2020, 3.9 million in 2025, 5.1 million barrels in 2030, and 6.1 million barrels in 2035. This means that Iraq will not attain its target capacity in the near future, or even over the long run (around 12 million barrels by the middle of this decade). It is noteworthy that Cordesman does not present an analysis of this vast difference between the Iraqi forecasts of the country's future production capacity, and the official U.S predictions. Why this American pessimism about the future of the Iraqi oil industry? The most plausible explanation here involves the absence of security, in addition to the ineffective administrative arm of the state, and the widespread bribery and corruption that threaten sound economic growth in the country. Also, what are some security-oil related developments that could impede the development of the Iraqi oil industry? There is the fate of the series of U.S-Iranian agreements over power sharing in the Middle East, and Iraq's position in these agreements. In the past six months, this became evident in the case of the nomination of a Prime Minister agreed upon by both parties, regardless of the outcome of parliamentary elections. The question is how exactly possible is it for this odd agreement to succeed, and what will the reactions to it from the Iraqi and regional political forces be? There is also the issue of ensuring the safety of thousands of Iraqis and foreigners who will work in the oil fields and installations, and who will have to move within the country and to and from surrounding countries. Will the security forces be able to provide security for them then, or will they become easy prey for terrorists and militias? There is also the issue of protecting the large imported equipment, and the oil pipelines lying within the fields and between the fields and export terminals. So the question is: is it possible to protect such equipment from theft, or the pipelines from sabotage or perforation for the purpose of stealing, as is happening these days? In addition, there is the question of protecting the vessels anchored in Iraqi ports from pirates. In recent weeks, three vessels and tankers were subjected to theft in the Iraqi ports overlooking the Arabian Gulf, even though they were under the protection of the U.S Fifth Fleet. In addition, it is expected that there will be differences with some neighboring countries as there are approximately 24 shared oil fields (with Iran, Kuwait and Syria), if the development of and production from these fields were not unified with these countries, or if borders were not demarcated among these countries. This is while noting that some of these fields were covered by the agreements signed with international companies. Meanwhile, there are Iranian demands that Iraq allocate one million barrels per day from its production, over several decades, and pay them as compensation to Iran for the war in the eighties, and the possibility that Iran may use this argument to block any increase in the Iraqi oil production capacity beyond 4 million barrels per day (the official quota allocated to each of the two countries by OPEC) whenever Iraq returns to the quota system. The confirmed oil reserves of Iraq are known, and amount to nearly 115 billion barrels of crude oil. In truth, the 2009 agreements are in the process of increasing production from known and currently productive fields. In other words, we are not talking about the risky process of prospecting new fields, where there may or may not be oil present. What does the future of Iraq's oil look like then: It is clear that this future is inextricably linked to the country's stability, and to whether or not its people will arrive at a social contract among themselves regarding the country's identity. Without this stability, without a robust and effective administrative branch of the government, and without putting an end to the endemic corruption in the ranks of state employees, it will be difficult to see how Iraq's production capacity can increase to a new high level, let alone effectively exploit the new oil revenues. A good example of this is other oil countries which have large oil reserves, but which nonetheless have a high level of poverty at the same time. *. Mr. Khadduri is an energy expert
