The coming decade promises a sea change in the region’s dynamics, as the former pariah state of Iraq becomes a major economic and political power on the back of rapidly rising oil production.
Thanks to its huge hydrocarbons reserves, Saudi Arabia, the world’s biggest oil producer, is the predominate political power in the Gulf, boasting the biggest economy and a leading role in regional politics.
But, if all goes to plan, Iraq could challenge Riyadh’s regional dominance of the oil sector and with it Saudi Arabia’s place at the top of the GCC table.
Saudi Arabiaproduced 8.9 million barrels a day (b/d) of oil in November last year, according to the Riyadh-based Joint Oil Data Initiative, down from an average of more than 10 million b/d in 2008. The country’s Oil Ministry says it has the ability to produce more than 12 million b/d if required.
Iraq is currently producing far less, about 2.3 million b/d. However, after years of economic sanctions and the chaos that followed the US-led invasion in 2003, the oil sector is finally being seriously developed.
Engineering executives tell MEED they are in talks with international oil companies about a series of multi-billion-dollar projects to boost the country’s oil production to around 7 million b/d by 2015 and to as much as 12 million b/d by 2020.
If these targets are met, Iraq will be challenging Saudi Arabia’s might within a decade. If it can maintain its nascent democracy and its strong ties with the West, it should also be able to wield considerable political clout.
How the two countries will deal with the shift in power remains to be seen, but Baghdad is set for a return to its former place as a dominant force in the region.