4 Min Read
* IEA warns of tight oil markets without Iraqi barrels
* Says current oil price too high, hurting India and China
* Sees no immediate supply problem over Iran oil sanctions
By Yara Bayoumy and Ahmed Rasheed
BAGHDAD, Feb 29 (Reuters) - Iraq is capable of more than doubling its crude oil production within three years, with the pace of further growth slowing steeply afterwards, the West's energy agency said on Wednesday.
Iraq, which sits on the world's fourth-largest reserves, signed deals with major oil firms to boost production levels - currently at about 2.9 million bpd - to as high as 12 million bpd by 2017, betting on rivalling top global producers Russia and Saudi Arabia.
But as the country struggles to rebuild its dilapidated infrastructure and faces daily violence and sabotage attacks nearly nine years after the U.S.-led invasion, officials have said the target could be reduced to around 8 million bpd.
International Energy Agency's chief economist Fatih Birol said on Wednesday he believed Iraq could achieve a production target of 6.5 million bpd by 2015 but that it could take up to 20 years to increase it to 8 million bpd.
"Many Iraqi interlocutors I met are talking about 6.5 million bpd by 2015 and I don't think that this is an unrealistic target, but of course many challenges remain," Birol told Reuters in an interview.
Birol was in Iraq to meet oil officials and industry experts ahead of a big IEA report on Iraq due in Nov. 2012.
"We have projected that Iraq production can come to around 8 million bpd in the next 20 years. That can be higher and lower depending on global oil markets," he said.
"If this 8 million bpd - which as I said is the highest growth among all the producing countries - doesn't take place, we will definitely be in difficulty ... in terms of tightness in global oil markets," he said.
Birol said the current oil price, which last week hit a 10-month high in dollar terms and an all-time high in euros and British pounds, was too high for consumers and could specifically hurt Asian economy giants China and India.
Oil prices have been rallying in the past months on fears of a loss of Iranian supplies amid a standoff with the West over Tehran's nuclear programme.
But data from developed countries has also shown in the past months that high oil prices are denting demand as users are cutting consumption in a move that might undermine a fragile global economic recovery.
"We should not forget it is also a major problem for the Asian economies, such as China and India, which were the engines of the growth in the last few years and they were the countries who took us out of the financial crisis in 2008," said Birol.
"Looking to the risk that China might be affected from that by slowing down its economy, I think we are facing the risk that the global economic recovery efforts may well be strangled," he added.
Birol also said he saw no "immediate problem of supply" from the Iranian standoff. Last year, the IEA released strategic stocks to compensate for the loss of Libyan supplies. (Editing by Dmitry Zhdannikov and James Jukwey)