‘Ultimately, sooner or later Iraq will return to the market,’ he said. ‘And the question we have to consider is how we will accommodate Iraq in the future oil market equation without destabilising the market.’
Asked how that might be achieved, Lukman said: ‘In the past, Iraq and Iran always had parity in quotas. My suspicion is that in the first instance, Iraq would go for parity with Iran. What happens after that is a matter for discussion.’
The future of the Iraqi oil sector has moved to centre stage in the debate over a US-led military campaign.
Some reports have suggested that in the wake of an attack, a US-dominated Iraq would leave OPEC and rebuild oil production capacity to around 6 million barrels a day (b/d). In September it produced 1.9 million b/d. Iran’s present production quota is 3.2 million b/d.
While the expansion of Iraqi production capacity will take time – Cambridge Energy Research Associates forecasts it will take five years to build production to 4.5 million b/d – there is no doubt the country will need to boost its oil revenues as the redevelopment programme kicks off.
In the short term, military action against Iraq would lead to a gap of between 1 million-2 million b/d in world supplies. Lukman confirmed the organisation’s ability and will to meet that shortfall, but said there was no certainty a war in the Gulf could be restricted to Iraq and other Gulf output could be affected.