Another milestone on the way in Iraq?

By Thomas Lifson

Energy production is a key to the eventual success of a democratic Iraq. That is why over 300 attacks have taken place on energy production, refining, and transportation facilities. Not only are current supplies and revenues diminished, future exploitation of new reserves (estimated to be just behind those of Saudi Arabia) is discouraged.

But now comes an indication from the Sunday Telegraph that a large and very successful gas exploration and development company, the British BG Group, is seriously interested in developing Iraq's resources.

The most likely initial target would be in the Kurdish-controlled north, which is relatively safe. Although details on sharing revenues have not yet been worked out, Iraq's cabinet has approved legislation allowing the Kurds to negotiate their own energy deals. BG does not rule out other energy deals in other parts of Iraq, though.

Iraq could readily triple its energy production, and quite possibly take it even much higher from current levels of about 2 million barrels per day equivalent. That is enough to affect world oil prices, not to mention providing revenues for the Iraqi government to use to begin improving the lot of ordinary people and even to buy support from dissident factions not committed to overthrowing it.

Iraq's potential is huge. Its deposits are easy to exploit, and under Saddam a lot of low hanging fruit went unpicked.

Lost in the media news about problems in Baghdad is the fact that much of Iraq, especially the north, is rather peaceful.

If BG goes ahead and succeeds, and the facilities remain intact and highly profitable, a corner may be turned. Other companies will follow. Put this together with the apparent success of the surge so far in reducing violence, and the prospects for Iraq get a lot brighter.

Hat tip: Joe Crowley