Home
Iraq Energy Profile: Has Fifth Largest Proved Crude Oil Reserves In World – Analysis
Iraq was the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) in 2014, and it holds the world’s fifth largest proved crude oil reserves after Venezuela, Saudi Arabia, Canada, and Iran. Most of Iraq’s major known fields are producing or in development, though much of its known hydrocarbon resources have not been fully exploited. All of Iraq’s known oil fields are onshore and the largest fields in the south have relatively low extraction costs owing to uncomplicated geology, multiple supergiant fields, fields that are typically located in relatively unpopulated areas with flat terrain, and the close proximity to coastal ports.1
Iraq is re-developing its oil and natural gas reserves after years of sanctions and wars. Iraq’s crude oil production grew by 950,000 barrels per day (bbl/d) over the past five years, increasing from almost 2.4 million bbl/d in 2010 to almost 3.4 million bbl/d in 2014. These production estimates include oil produced in the Iraqi Kurdistan Region, the semiautonomous northeast region in Iraq governed by the Kurdistan Regional Government (KRG). Despite this growth, Iraq’s production has actually grown at a slower rate than Iraq had expected because of infrastructure bottlenecks in the south, supply disruptions in the north, and delays in awarding contracts.
iraq_mapThe Iraqi government has set ambitious oil production targets. The government is currently renegotiating field production targets set in Technical Service Contracts (TSCs) previously signed with international oil companies (IOCs). Based on some of the target revisions that have already been announced, the Energy Intelligence Group estimates that Iraq is now aiming for crude oil output of 9.0 million bbl/d by 2020.2 Key challenges the Iraqi government faces to achieve this target include expanding southern export infrastructure and storage capacity, building a large common water supply and re-injection system in the south, passing a hydrocarbon law, a slow administrative process of doing business, and less favorable contract terms to attract IOCs to invest in new projects. Also, political instability, sectarian violence, and the threat of the Islamic State of Iraq and the Levant (ISIL) spreading to other areas of Iraq pose significant uncertainty for Iraq’s future.
Petroleum and other liquids
Iraq holds about 18% of proved crude oil reserves in the Middle East and almost 9% of total global reserves. Despite having large reserves, increases in oil production have fallen behind ambitious targets because of infrastructure constraints and political disputes.
Reserves
According to the Oil & Gas Journal, Iraq held 144 billion barrels of proved crude oil reserves as of January 1, 2015, representing almost 18% of proved reserves in the Middle East and almost 9% of global reserves, ranking fifth in the world.3 Iraq’s resources are not evenly divided across sectarian-demographic lines. Most known oil and natural gas resources are concentrated in the Shiite areas of the south and the ethnically Kurdish region in the north, with few known resources in control of the Sunni minority in central/western Iraq.
Iraq has five super-giant fields (defined as holding more than 5 billion barrels of oil reserves) in the south that account for about 60% of the country’s total proved oil reserves.4 An estimated 17% of oil reserves are in the north of Iraq, near Kirkuk, Mosul, and Khanaqin.5 Control over rights to reserves is a source of controversy between the ethnic Kurds and other groups in the area. The International Energy Agency (IEA) estimated that the Iraqi Kurdistan Region contained 4 billion barrels of proved reserves.6 KRG’s estimate is much higher because it is a resource estimate that includes unproved resources. The KRG recently increased its oil resource estimate from 45 billion barrels to 60 billion barrels,7 although this has not been independently verified and this number likely includes at least some resources in disputed areas—especially Kirkuk.
Sector management
The Ministry of Oil in Baghdad oversees oil and natural gas development and production in all but the Kurdish territory through its operating entities, the North Oil Company (NOC) and the Midland Oil Company (MDOC) in the north and central regions, and the South Oil Company (SOC) and the Missan Oil Company (MOC) in southern regions. In the Iraqi Kurdistan Region, the KRG, with its Ministry of Natural Resources, oversees oil and gas development and production. International oil companies (IOCs) are very active in Iraq, including the Iraqi Kurdistan Region. IOCs operate under technical service contracts (TSCs) in Iraq, which are signed with the Ministry of Oil in Baghdad, and under production-sharing agreements (PSAs) in the Iraqi Kurdistan Region signed with the KRG. Over the years, KRG’s push to sign PSAs with IOCs has escalated tensions with Baghdad, making the situation uncomfortable for some IOCs who have been pressured on different occasions to reduce their investments in Kurdistan.8
Production
petroleum_production_consumptionIraq’s crude oil production increased by more than 300,000 bbl/d in 2014, compared with the previous year, averaging almost 3.4 million bbl/d in 2014. Supply disruptions in the north escalated in 2014 after the Iraq-Turkey (IT) pipeline flows were completely halted in March. The ISIL offensive caused more northern production to shut down in June. However, increased output at fields in southern Iraq and in the Iraqi Kurdistan Region more than offset disrupted volumes. Iraq also produces about 30,000 bbl/d of non-crude liquids. The production growth in 2014 was a significant improvement from 2013 when year-over-year production grew by only 70,000 bbl/d. Poor oil production growth in 2013 is attributed to infrastructure bottlenecks in the south and an increase in supply disruptions to northern fields because of frequent attacks on the IT pipeline.
Production in the northern region controlled by the KRG in the past has tended to fluctuate because of disputes with the central Iraqi government, but recently it has steadily increased. The U.S. Energy Information Administration (EIA) estimates KRG’s crude oil production averaged 350,000 bbl/d during the second half of 2014. Increased pipeline capacity has allowed the KRG to increase output at its fields, while exporting it through the Turkish port of Ceyhan. KRG’s Ministry of Natural Resources reported that oil flows through the Kurdish crude pipeline to Turkey, which started in May 2014, reached as high as 300,000 bbl/d in November 2014,9 but pipeline flows fluctuated in 2014 typically averaging below that level. The KRG also trucks between 50,000 and 100,000 bbl/d of crude and condensate to the Turkish ports of Mersin, Dortyol, and Toros, and to Iran.10
[You must be registered and logged in to see this link.]
Iraq was the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) in 2014, and it holds the world’s fifth largest proved crude oil reserves after Venezuela, Saudi Arabia, Canada, and Iran. Most of Iraq’s major known fields are producing or in development, though much of its known hydrocarbon resources have not been fully exploited. All of Iraq’s known oil fields are onshore and the largest fields in the south have relatively low extraction costs owing to uncomplicated geology, multiple supergiant fields, fields that are typically located in relatively unpopulated areas with flat terrain, and the close proximity to coastal ports.1
Iraq is re-developing its oil and natural gas reserves after years of sanctions and wars. Iraq’s crude oil production grew by 950,000 barrels per day (bbl/d) over the past five years, increasing from almost 2.4 million bbl/d in 2010 to almost 3.4 million bbl/d in 2014. These production estimates include oil produced in the Iraqi Kurdistan Region, the semiautonomous northeast region in Iraq governed by the Kurdistan Regional Government (KRG). Despite this growth, Iraq’s production has actually grown at a slower rate than Iraq had expected because of infrastructure bottlenecks in the south, supply disruptions in the north, and delays in awarding contracts.
iraq_mapThe Iraqi government has set ambitious oil production targets. The government is currently renegotiating field production targets set in Technical Service Contracts (TSCs) previously signed with international oil companies (IOCs). Based on some of the target revisions that have already been announced, the Energy Intelligence Group estimates that Iraq is now aiming for crude oil output of 9.0 million bbl/d by 2020.2 Key challenges the Iraqi government faces to achieve this target include expanding southern export infrastructure and storage capacity, building a large common water supply and re-injection system in the south, passing a hydrocarbon law, a slow administrative process of doing business, and less favorable contract terms to attract IOCs to invest in new projects. Also, political instability, sectarian violence, and the threat of the Islamic State of Iraq and the Levant (ISIL) spreading to other areas of Iraq pose significant uncertainty for Iraq’s future.
Petroleum and other liquids
Iraq holds about 18% of proved crude oil reserves in the Middle East and almost 9% of total global reserves. Despite having large reserves, increases in oil production have fallen behind ambitious targets because of infrastructure constraints and political disputes.
Reserves
According to the Oil & Gas Journal, Iraq held 144 billion barrels of proved crude oil reserves as of January 1, 2015, representing almost 18% of proved reserves in the Middle East and almost 9% of global reserves, ranking fifth in the world.3 Iraq’s resources are not evenly divided across sectarian-demographic lines. Most known oil and natural gas resources are concentrated in the Shiite areas of the south and the ethnically Kurdish region in the north, with few known resources in control of the Sunni minority in central/western Iraq.
Iraq has five super-giant fields (defined as holding more than 5 billion barrels of oil reserves) in the south that account for about 60% of the country’s total proved oil reserves.4 An estimated 17% of oil reserves are in the north of Iraq, near Kirkuk, Mosul, and Khanaqin.5 Control over rights to reserves is a source of controversy between the ethnic Kurds and other groups in the area. The International Energy Agency (IEA) estimated that the Iraqi Kurdistan Region contained 4 billion barrels of proved reserves.6 KRG’s estimate is much higher because it is a resource estimate that includes unproved resources. The KRG recently increased its oil resource estimate from 45 billion barrels to 60 billion barrels,7 although this has not been independently verified and this number likely includes at least some resources in disputed areas—especially Kirkuk.
Sector management
The Ministry of Oil in Baghdad oversees oil and natural gas development and production in all but the Kurdish territory through its operating entities, the North Oil Company (NOC) and the Midland Oil Company (MDOC) in the north and central regions, and the South Oil Company (SOC) and the Missan Oil Company (MOC) in southern regions. In the Iraqi Kurdistan Region, the KRG, with its Ministry of Natural Resources, oversees oil and gas development and production. International oil companies (IOCs) are very active in Iraq, including the Iraqi Kurdistan Region. IOCs operate under technical service contracts (TSCs) in Iraq, which are signed with the Ministry of Oil in Baghdad, and under production-sharing agreements (PSAs) in the Iraqi Kurdistan Region signed with the KRG. Over the years, KRG’s push to sign PSAs with IOCs has escalated tensions with Baghdad, making the situation uncomfortable for some IOCs who have been pressured on different occasions to reduce their investments in Kurdistan.8
Production
petroleum_production_consumptionIraq’s crude oil production increased by more than 300,000 bbl/d in 2014, compared with the previous year, averaging almost 3.4 million bbl/d in 2014. Supply disruptions in the north escalated in 2014 after the Iraq-Turkey (IT) pipeline flows were completely halted in March. The ISIL offensive caused more northern production to shut down in June. However, increased output at fields in southern Iraq and in the Iraqi Kurdistan Region more than offset disrupted volumes. Iraq also produces about 30,000 bbl/d of non-crude liquids. The production growth in 2014 was a significant improvement from 2013 when year-over-year production grew by only 70,000 bbl/d. Poor oil production growth in 2013 is attributed to infrastructure bottlenecks in the south and an increase in supply disruptions to northern fields because of frequent attacks on the IT pipeline.
Production in the northern region controlled by the KRG in the past has tended to fluctuate because of disputes with the central Iraqi government, but recently it has steadily increased. The U.S. Energy Information Administration (EIA) estimates KRG’s crude oil production averaged 350,000 bbl/d during the second half of 2014. Increased pipeline capacity has allowed the KRG to increase output at its fields, while exporting it through the Turkish port of Ceyhan. KRG’s Ministry of Natural Resources reported that oil flows through the Kurdish crude pipeline to Turkey, which started in May 2014, reached as high as 300,000 bbl/d in November 2014,9 but pipeline flows fluctuated in 2014 typically averaging below that level. The KRG also trucks between 50,000 and 100,000 bbl/d of crude and condensate to the Turkish ports of Mersin, Dortyol, and Toros, and to Iran.10
[You must be registered and logged in to see this link.]
