Baghdad vs Copenhagen: Oil companies bet that oil era is far from over

While delegates in Copenhagen are trying to hash out an deal to reduce carbon, oil companies in Baghdad over the past two days have swiftly agreed to several huge contracts that will extend the hydrocarbon age for decades to come.

The fierce competitiveness with which the world’s biggest oil companies elbowed each other aside for the chance to develop some of Iraq’s biggest oil fields could not have sent a clearer message: Oil is here to stay, with or without an agreement forged at Copenhagen.

So far the oil deals companies have signed with Baghdad could add 8.5m barrels a day of production to Iraq’s current 2.5m b/d. If achieved, it would be one of the most remarkable increases in a countries’ oil production in recent history.

But climate campaigners need not despair altogether; Iraq’s oil is at least a lot cleaner than some of the alternatives companies are pursuing.

Royal Dutch Shell in Friday’s auction won the right to develop Iraq’s giant Majnoon field, which is not only much cheaper to tap than the company’s Canadian oil sands, but also uses far less energy and emits far less CO2. Iraqi oil may not be the holy grail that is second generation biofuel, but its a good deal better than many other alternatives, such as oil from Canada tar sands, Madagascar, and the Arctic.

And one more thing… Baghdad’s two-day auction itself is probably a lot less carbon intensive than Copenhagen meeting.

Related links:

Shell CEO on debt, gas, Iraq, mergers, and more (FT Energy Source, 26/11/09)
That old tune about Kurdistan, the oil province of tomorrow (FT Energy Source, 23/11/09)

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