flash distillation or multiple-effect desalination). As such, more than 10% of Iraq’s total gas production in 2030 is used for desalination. However, desalination does not have to remain wedded to natural gas, especially if the gas can be better used elsewhere. For example, to increase the share of renewables in power generation, co-generation plants could be paired with RO technologies to provide operational flexibility. This would also allow the system to be used as a demand response facility as the water storage tanks could also serve as energy storage during times of excess electricity production.

In addition, it is likely that Iraq will require more mobile small-scale desalination units to deal with the deteriorating quality of its rivers. A combination of declining freshwater flows, increasing salinisation, ongoing discharge of industrial wastewater and sewage, and agricultural runoff has reduced the quality of the water beyond the World Health Organization safe drinking water standards. Nonetheless, for desalination to play a larger role in Iraq’s water supply, current challenges related to financing, security and contracts will need to be resolved.

Investment in oil and gas

The oil price cycle of the last decade has been directly reflected in the capital investment in Iraq’s oil and gas sector. Investment levels peaked in 2014, at just over USD 20 billion, but have since fallen significantly, averaging around USD 12 billion per year. Part of this decrease was absorbed by industry-wide cost deflation, and so the net effect on projects would likely have been smaller than the headline of capital decline would suggest. Nevertheless, the drop in the oil price led to some delays in remuneration by the Ministry of Oil to IOCs for past investments, which in turn led to some reluctance by IOCs to commit further capital. The cost reductions and opportunities for production growth in US tight oil resources also diverted potential capital investment away from Iraq. Along with security issues related to ISIL and political instability in the north, these factors led to the reduction in plateau production targets that had been agreed between the government and IOCs, and to a drop in investment in real terms.

Looking forward, annual upstream investment in oil and gas between 2018 and 2030 averages USD 15 billion. Of this, a rising share is directed to gas projects, facilitating the 35 bcm increase in production over the period. One priority in the near and medium term is investment in largescale water treatment projects to supply water for reinjection in the oilfields in the South region. Investment in such projects can yield huge dividends. For example, the CSSP, a facility that could provide 5 mb/d of water at an estimated capital cost of around USD 5 billion, could unlock crude oil production of over 400 kb/d by 2030 and generate an estimated USD 50 billion in cumulative revenue to 2030.