It did not hit the headlines, but this week saw a significant event in the future of the global oil market – Iraq announced it had made its first new oil find in 30 years.
The oil discovery by an Iraq state owned company was at Maysan, about 350 kilometres south of Baghdad near the Iranian border. To date most of the new oil reserves in Iraq have been developments in known fields usually in the country's autonomous Kurdistan region where there are jurisdictional disputes with the central Iraq government.
The new discovery confirms that only Iraqi internal disputes and/or a severe breakout of terror attacks in the Middle East can stop the world becoming awash with oil and gas by the end of President Obama’s second term.
And if that happens the inflated construction costs, which have been inflicted on Australia’s latest LNG plants, may have to be written back.
All the emphasis has been on the amazing American fracking techniques, (Gas supplies are a big fracking deal, Jan 22) which will see the US become the largest oil producer by 2017, exceeding the current Saudi capacity of about 10 million barrels per day.
All the indications are that the US will effectively go much further because of the surge in US gas production. Oil and gas will become interchangeable in many markets.
But what is happening in Iraq is just as staggering. Currently Iraq produces about three million barrels of oil per day but the Kurdistan developments will enable it to rise to six million barrels per day, provided it can attract the money to develop the fields and associated infrastructure. Iraq is set for an enormous boom if the security and jurisdictional threats can be managed.
US troops may have left Iraq, but international oil and gas companies can’t resist the opportunity and are punting that all will be well and that what happened in Algeria will be rare.
Shell, Exxon Mobil, Chevron and France’s Total SA are investing large sums in Iraq to produce oil and natural gas. And there are many more groups rushing to Iraq, including a string of small companies.
Australia’s Worley Parsons Ltd has won a three-year contract with Shell Gas Iraq BV to provide project management support and services for Basra Gas Company's gas facilities and infrastructure in Iraq. (Worley Parsons wins Iraqi Shell Gas contract, January 21.)
And then there is Iran, which has huge fields that desperately need investment.
Despite United States and European Union sanctions, Iran is currently China's third largest supplier of crude, providing Beijing with roughly 12 per cent of its total annual oil consumption – Iran’s oil exports to China rose 45 per cent in December compared with November.