Report: Iraqi Oil Supply Could Be Doubled

Taking into account the untapped potential of Iraq's western desert, the war-torn country's oil reserves could be nearly twice as large as previously estimated, containing more than 200 billion barrels, a new analysis of Iraqi oil resources says.

The consulting firm IHS Inc., in a report released Wednesday, said there may be an additional 100 billion barrels of oil beneath the surface in the western part of the country. The report estimated the country's current reserve base to be 116 billion barrels.

The U.S. Geological Survey has been less optimistic about Iraq's untapped potential, estimating there exists an additional reserve base of 45 billion barrels.

The IHS report also said Iraq's daily production, which now stands at 2 million barrels per day, could rise to 4 million barrels a day if conflict subsides and new investments in oil infrastructure are made.

"Obviously the security side is a big question," said Ron Mobed, president and chief operating officer of the energy division of IHS.

In 1979, the country's best year, Iraqi oil production averaged roughly 3 million barrels a day. Iraqi officials had set a target of pumping 3.5 million barrels a day by mid-2006, but that goal was not realized.

IHS said its experts performed a field-by-field analysis of Iraqi oil prospects and that it would release a detailed analysis of Iraqi oil reserves next month.

Englewood, Colo.-based IHS said its performed a year's worth of research, using its own experts and Iraqi oil engineers. Iraq's national oil company first discovered oil in the western desert in 1993, and Syria's national oil company drilled four wells to appraise the desert area's potential in 2002 and 2003, IHS said.

According to IHS' rankings, Iraq ranks third in the world in proven oil reserves, behind Saudi Arabia and Iran.

Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, said more oil out of Iraq will have an impact on oil markets in the long term, but it isn't affecting them now as markets are roiled daily by the latest reports of violence.

"It's going to take years to bring that oil to the market," he said.

A call to Iraq's oil ministry seeking comment was not immediately returned.