Iraq has known oil reserves of 116 billion barrels

Iraq is sitting on potential reserves of 100 billion barrels, nearly twice as much as currently estimated, according to a study by energy analysts IHS.

If these reserves were exploited, it said, Iraq could overtake Saudi Arabia as the world's top oil producer.

But a major improvement in security and investment was needed, it added.

'Golden opportunity'

The IHS survey, which examined Iraq's oil reserves both before and after the overthrow of Saddam Hussein, is the most comprehensive conducted since the 2003 invasion.

It found that Iraq had known reserves of 116 billion barrels and could be sitting on a further 100 billion barrels.

Iraq's reserves are clearly phenomenal

Ron Mobed, IHS

Current output of two million barrels a day is lower than in early 2003, when three million barrels were being pumped, and almost half that being produced in 1979.

However, it said Iraq had the capacity to increase production to four million barrels by 2012 and to further increase that to six million within time.

"Iraq's reserves are clearly phenomenal," said Ron Mobed, president and chief operating officer of IHS, adding that they represented a "gold star opportunity".

But he stressed that the security situation needed to improve dramatically if the foreign investment needed to improve the country's infrastructure was to materialise.

"Obviously the security situation is very bad. But once the infrastructure is in place, the oil will come out of the ground quite cheaply."

Below capacity

The report found that Iraq's two main oilfields, at Kirkuk in the north of the country and Rumaila in the south, were operating below capacity.

This was partly due to damage caused by the war and previous sanction regimes although Mr Mobed said this was not "irreparable".

Earlier this year, the Iraqi government agreed a draft law for how its oil wealth would be shared among different ethnic groups, seen as crucial to encouraging new investment.

The proposed law is due to be considered by the Iraqi parliament shortly, although the Kurdish region rejects some of the proposals.