Iraq Raises Oil Reserves Estimates 25 Percent

toggle caption Essam Al-Sudani/AFP/Getty Images

Iraq is claiming it has more oil than anyone else -- well, except for Saudi Arabia. Iraq's Oil Minister Hussein al Shahristani says a re-evaluation of Iraq's oil fields increases the country's proven reserves from 115 billion barrels to 143 billion. And, Shahristani said, that number may go up, as it doesn't include fields in Kurdistan, and new exploration may find other reserves.

However, the news is being greeted with a note of skepticism, with some analysts suspecting more of a political rather than an engineering basis for the 25 percent increase. From the BBC:

"This is fairly significant," says David Hunter, analyst at M&C Energy Group. "You have to bear in mind that 80 percent of the Iraqi economy is based on oil." The Iraqi oil minister also said that his country would now officially inform the Organisation of Petroleum Exporting Countries (OPEC) of its findings, so that the new reserves figure can obtain international recognition. "There may be a political angle here," says Mr. Hunter, who suggests that Iraq may be pushing for a bigger share of OPEC's oil production.

Regardless, today Iraq is producing only about 2 million barrels a day, below its current OPEC quota. The infrastructure in Iraq was damaged by years of sanctions and insurgency. Billions of dollars of investment are needed both in developing the oil fields and in improving the distribution infrastructure.

toggle caption Spc. Frank Smith/U.S. Army

That infrastructure looks like its being held together with hope and baling wire, to be honest. Last year, I visited the Al-Basrah Oil Terminal off the coast of Iraq, where much of Iraq's oil ends up. It is a rusting hulk of a structure that emerges from the sea like some sort of dying metallic dinosaur. Engineers told me they didn't even know just how bad the condition of the pipeline is; they didn't dare run it at full pressure for fear it would burst, and they didn't dare shut down the flow to fix it for fear that the weight of the ocean would implode it.

The big question, though, surrounding Iraq's oil, is not how much of it there is, but how the profits are divided. That question still hasn't been answered, and Iraq watchers say it underlies one of the potential flash points in Iraq -- the tension between Arabs and Kurds.