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Thursday, October 18, 2018

Status of Iraq - EIA

According to the US Department of Energy, Energy Information Administration (EIA), Iraq holds 110 trillion cubic feet of natural gas and more than 112 billion barrels of oil - the world's second largest proven reserves - and is a focal point for regional and international security issues.

Iraq has attacked two of its neighbours, Iran in 1980 and Kuwait in 1990, and has been exposed to more than a decade of economic sanctions. As a result, the country's economy, infrastructure, and society have deteriorated significantly. Iraq's gross domestic product (GDP) has fallen sharply since before the Iraqi invasion of Kuwait, but oil production has increased since 1996 and oil prices have risen since 1998 resulting in an estimated Iraqi real growth of 12% in 1999, 11% in 2000. With 3.2 GDP% growth in 2001 and 2002, and higher oil prices but lower net oil exports, Iraq's real GDP appears to have remained roughly flat. Iraqi inflation currently is estimated at around 25%.

Iraq's true resource potential may be far greater than the proven 112 billion barrels, as 90% or so of the country is largely unexplored. Only about 2,000 wells reportedly have been drilled in Iraq, compared to around 1 million wells in Texas, for instance. Some two-thirds of Iraq's production has been coming out of the southern fields of Rumaila, Zubair, and Bin Umar.

Following Iraq's invasion of Kuwait and the embargo on Iraqi oil exports, Iraqi oil production fell to around 0.3 mbd, from 3.5 mbd in July 1990. According to the International Energy Agency (IEA), Iraqi crude oil production in 2002 averaged 2.02 mbd, down from 2.36 mbd in 2001 and 2.57 mbd in 2000, with large weekly and monthly fluctuations. Iraq claims that oil production capacity expansion has been constrained by the refusal of the UN to provide Iraq with all the oil industry equipment it has requested.

Oil industry experts generally assess Iraq's sustainable production capacity at no higher than about 2.8-2.9 mbd, with a net export potential of around 2.3-2.5 mbd (including smuggled oil). In July 2002, then-Iraqi Oil Minister Amer Rashid said that Iraq's sustainable capacity was 3.2-3.3 mbd, and that the country hoped to increase this to 3.5 mbd by the end of 2003 - even without the help of foreign oil companies. (Iraq last produced 3.5 mbd in July 1990.)

Among other challenges in maintaining, let alone increasing, oil production capacity is Iraq's battle with "water cut" (damaging intrusion of water into oil reservoirs), especially in the south. A UN report in June 2001 said that Iraqi oil production capacity would fall sharply unless technical and infrastructure problems were addressed.

U.N. Resolution 986 (April 1995) allows Iraq to sell specified dollar amounts of crude oil over six-month periods, in part for the purchase of humanitarian supplies ("oil-for-food"). The current 6-month Phase XIII began on 4 December 2002. Official "oil-for-food" exports from Iraq were about 1.55 mbd in December 2002 and 1.79 mbd in January 2003.

During 2001, Iraq averaged official (i.e., U.N. monitored) net oil exports of around 2 mbd, although this number fluctuated greatly through the year, and fell to under 1.5 mbd during the first 9 months of the year. The reduced volume of Iraqi exports in much of 2002 appears to have been a result of: 1) Iraq's unilateral one-month embargo of oil exports in April 2002 ostensibly in support of the Palestinians; and 2) pressure by the United States and other countries to clamp down on Iraq's practice of charging an illegal "surcharge" on their U.N. -authorized oil exports. Since mid-December 2002, however, Iraq has increased its production and exports sharply, with production reportedly reaching 2.6 mbd, "oil-for-food" exports at 1.8 mbd, and illegal exports at around 0.4 mbd.

According to IEA Paris, Iraq’s production in February of 2.49 mbd was the highest since February 2001 when it was 2.77 mbd.

Sources: US Department of Energy, Energy Information Administration (EIA),

International Energy Agency (IEA)

For a full overview of Iraq’s and OPEC oil production.

Contact:
Erik Ranheim or Jan Svenne