Oil prices could climb to $120 per barrel this year, a level that would be "acceptable," Iraq's oil minister said Tuesday while announcing that the country would hold its fourth energy bidding round in November.
Abdul-Karim Elaibi said that current prices for crude "indicate that the (oil price) will reach $120, which is an acceptable price."
Oil prices, currently at about $102 per barrel for the U.S. benchmark crude futures contract, have climbed as fighting in Libya raised concerns about supplies. Exports from the North African nation, which before the ongoing crisis produced about 1.6 million barrels per day, have largely been halted.
Also factoring into prices were worries that the unrest that has gripped the Arab world could spread to the oil rich Gulf Arab region, affecting supplies from other key members of the Organization of the Petroleum Exporting Countries.
For Iraq, rising prices are a boon.
The country relies on oil sales for the overwhelming majority of its budget, and the new licensing round he announced Tuesday was the latest push by the OPEC member state to boost its ailing energy sector, which was hammered by decades of war, neglect and sabotage.
Earlier licensing rounds drew limited interest, with some of the biggest Western majors steering largely clear of the offerings as Iraq's security concerns weighed heavily on interest in investing in the country that sits atop the world's fourth largest proven reserves of conventional crude.
Elaibi said 12 exploration blocs would be offered up for bidding, with 70 percent of them natural gas blocs and the rest a combination of oil and gas. He did not specify which fields would be offered.
Elaibi said he expected Iraq's daily oil production to hit 6.5 million barrels by 2014, with output to stand at 2.75 million barrels per day in 2011. Output is projected to climb to 3.3 million barrells per day in 2012 and 4.5 million barrels per day in 2013.
The blocs on offer are expected to add about 29 trillion cubic feet of natural gas to the current 126.7 trillion cubic feet in reserves, and about 10 billion barrels of oil to the current 143.1 billion barrels of oil, Elaibi said.
He also said that the proven oil reserves could be boosted by an additional 30 billion barrels based deposits in the self-ruled Kurdish region in the north of the country. Those reserves have yet to be included in the overall figures put out by the government.
The central government in Baghdad has been arguing for years with the Kurds over nearly two-dozen production sharing contracts that the Kurds signed independently with foreign firms. The Baghdad government has deemed such deals illegal.