Iraq's ability to reach targets for increased oil exports to a world market hit by high prices depends on improved security, a former top British diplomat warned at a major regional conference today.

Jeremy Greenstock, London's former special representative for Iraq, said increasing production remained a priority for the administration in Baghdad, with the oil ministry having set a target of three million barrels a day (bpd) by the end of the year.

"Reaching this target will require a continuing effort to rehabilitate fields as well as further investment and development of management skills," he told 500 delegates at the two-day Asia Oil and Gas Conference Asian in Kuala Lumpur.

"It will also depend on a general improvement in the security situation. For this last reason, if no other, the earlier hope of bringing in foreign involvement on a planned basis by the end of 2004 looks too optimistic."

Greenstock said oil production rose in the second half of 2003 to a weekly average of 2.3 million bpd.

"Since then production has fluctuated between 2.3 and 2.5 million barrels a day, with infrequent dips below this level due partly to repair work and partly to recovery from occasional acts of sabotage," he said.

At the same time, Greenstock said exports have "developed well," reaching an average of 1.7-1.8 million bpd so far in 2004.

Foreign investment

However, investment of at least 10 billion dollars and perhaps as much as 20 billion would be needed over the next few years to increase production to around four million bpd, he said.

"Given that curent oil revenues are almost exclusively used to meet the running costs of government, a high proportion of this new investment will need to be attracted from overseas."

Foreign investment, however, "will take time to materialise. They will wait for political stability to take place."

Iraq has the world's second-largest proven reserves at some 115 billion barrels but production has been sharply reduced by more than two decades of war and 13 years of UN sanctions, and the battered oil sector is now being targeted by militants opposed to the US occupation.

Iraqi Prime Minister Iyad Allawi last week said the country had lost more than US$200 million over the past seven months due to 130 separate attacks on its pipeline network.

He blamed terrorists and foreign fighters for targeting the industry, which generates more than 90 percent of Iraq's revenues.

Increase production

Meanwhile, in Indonesia, OPEC president Purnomo Yusgiantoro on Monday urged oil producers who are not members of the cartel to increase production to help push world prices down.

He said the Organisation of Petroleum Exporting Countries would keep its promise to increase output by 2.5 million bpd by August 1.

Non-OPEC oil producers account for about 60 percent of global production.

Yusgiantoro said oil prices were strengthening again, with OPEC crudes reaching around 35 dollars per barrel. - AFP