SURVEY: Iraq's oil and gas plans threatened by politics and low oil prices
| Published date | 01 November 2016 |
| DOI | http://doi.org/10.1111/oet.12438 |
| Date | 01 November 2016 |
SURVEY
An analysis of Iraq’s political and economic problems and their impac t on its oil and gas industr ies by Oil and Energy
Trends’ Consulting Editor, Dr Paul McDonald
Iraq’s oil and gas plans threatened by politics and low oil prices
Iraq’s ambitious plans to increase oil production, mod-
ernize, and extend the rening sector and export natural
gas are all under t hreat from the continuing politi-
cal instability and nancial problems in the country.
e government in Baghdad is struggling to impose
its authority amid the rivalry between Sunni and Shia
groups in the south of the country, while in the north
there is the ever-present threat of a break-away by Kur-
distan, which would depr ive Iraq of a signicant propor-
tion of its oil product ion and exports, along with some
of its future gas production.
e nancial problems are related to the low price
of oil, which has cut t he revenues from exp orting oil,
thereby reducing Iraq’s abilityto expand and improve its
energy industries. Improvements are urgently required
throughout the supply chains of both the oil and gas
industries. Whi le many of these are aimed at increasing
exports of oil,there is also a need to address the problem
of domestic fuel shor tages arising from an inadequate
rening and distribution system. Gas, meanwhile, is suf-
fering from decades of neglect and also requires serious
attention.
Raising production
e government’s immediate aim is to increase the pro-
duction of oil. Iraq has large reserves (see Ta bl e B ) , su g -
gesting that a large upli in output is perfectly feasible.
However, Iraq has so far struggled to achieve this.
Iraq’s oil production has been badly aected by years
of war. From 1980 to 1988 it was involved in a war with
Iran during which time a number of oilelds along the
border with Iran were damaged. Exploration and pro-
duction were severely aected throughout the country,
causing production to drop sharply. Another large fall
took place following the invasion of Kuwait and the sub-
sequent Gulf War during 1990-1991, when Iraq was sub-
ject to a range of UN sanctions designed to restr ict both
its production and exports [1]. e US-led invasion of
2003 had a similar eect, and although Iraq’s production
has been growing st rongly in recent years (see Figure B)
the oil industry is still suering from years of neglect
as the result of wars and sanctions, while the internal
unrest that followed the 2003 war poses a continuing
threat to oil industr y operations in many parts of the
country.
Iraq has set itself a series of production targets
in recent years covering the period up to 2020. In
2012, the Ministry of Petroleum came up with a gure
of 13 mn bpd that was to be achieved by 2020. e
following year, a new “scenario” was produced for a
Table B
Iraq: Oil Prole, 2016
Proven Reserves 143.1 bn bbl∗
Reserves Remaining 86.9 years†
(mn bpd)‡
Production
Crude Oil 4.4
NGL 0.1
Total 4.5
Consumption
Total 0.7
Net Exports
Total 3.8
∗As of 1.1.16
†Based on 2016’s estimated output
‡First nine months
Figures include Kurdistan
Totals rounded
Source: (Reserves) Oil & Gas Journal
(Other) Author’s estimate
Includes NGL
Totals rounded
Source: (1980-2015) BP Statistical Review of World Energy
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1980 1985 1990 1995 2000 2005 2010 2015
(mn bpd)
Figure B: Iraq: Oil Production, 1980-2016
2020 total of 9 mn bpd. Somewhat confusingly, the
Ministry also referred to an output level of 6 mn bpd
with a target date of 2025 [2].
ese totals were conceived in the light of two major
licensing rounds covering the development of 13 elds,
which brought in a numbe r of international oil com -
panies, along with some separately negotiated deals,
mostly covering oilelds operated under the jurisdic-
tion of the autonomous Kurdistan Reg ional Government
(KRG).
e planned production totals were massively
over-ambitious and began to be scaled back as the
problems involved in raising production over such a
short period, in eect, almost trebling oil production in
© 2016 John Wiley& Sons Ltd
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