The International Energy Agency announced it was set to review Iraq's energy sector as part of its World Energy Outlook for 2012. Last year, the IEA said Iraq was on pace to provide the largest single increase to global oil production in the coming years. In December, however, the agency warned that domestic politics could get in the way of energy developments. Given Iraq's post-war political track record, it might be awhile before Iraq realizes its full oil potential.
Iraqi officials had said they hoped the IEA's assessment would give them some insight into what Baghdad and the Kurdish government in Erbil need to do in order to become a dependable oil and natural gas exporter. There's still no law governing the country's oil sector, yet the IEA had said Iraq was on pace to reach a production level of around 4.36 million barrels per day by 2016 and there's nowhere to go but up. The political circus in Iraq, however, suggests not much gets done in a country where oil can buy a lot of things, but does little to keep the lights on for most Iraqis.
Iraq, after a stormy 2010 parliamentary election, smashed the world record for the longest period between elections and the forming of a new government. Not exactly an accomplishment for a country that had democracy handed to them by the so-called standard bearer of participatory government. Baghdad politics have since been held together by the tiniest of threads, with various political factions storming out of the halls of government at various times for various reasons. Though the fight hasn't yet taken to the streets, the country's Shiite prime minister ordered his Sunni vice president arrested on terrorism charges.
The IEA said its outlook on Iraqi would assess how energy impacts the broader economy. According to some analysts, most of Iraq's oil hasn't even been discovered yet. That's good news for a post-war country that, internal politics aside, at least plays well with others. Last week, Iraq's Foreign Minister Hoshyar Zebari became the first Iraqi minister to visit South Korea in more than 20 years. With Seoul looking for new oil to replace Iranian crude, friends like Baghdad are good friends to have.
IEA Executive Director Maria van der Hoeven said Iraq's energy sector was of "huge importance to the global outlook." But even Iraqi representatives recognize the country has a lot of political messes to clean up at home. If 2010 is any indication, Iraqi officials might still be bickering over who sits where in parliament before the IEA's energy outlook is published later this year. And even then, the country's leaders are likely to bicker.
By. Daniel J. Graeber of Oilprice.com