Chapter 2: Prospects for the oil and gas sector

Figure 5. Iraq strengthens its rank as a leading oil producer

Iraq could overtake Canada to become the fourth-largest oil producer by 2030.

Myriad above-ground hurdles can add significantly to the cost and difficulty of executing hydrocarbon projects in Iraq. However, this does not diminish the fact that, from a technical perspective, oil projects in Iraq are among the lowest cost in the world. Iraq’s production is expected to grow by around 1.2 mb/d over the next ten years. This is slower than the 2.4 mb/d increase delivered since 2010, but it would still provide world markets with the third-largest increment of additional oil over the period, after the United States and Brazil (Figure 6). If achieved, production in 2030 would represent around 6% of global oil output, up from 5% now and less than 3% in 2010.

Figure 6. Top-five countries by increased oil production, 2018 to 2030

Iraq makes the third-largest contribution to global oil supply in the period to 2030.

When we last examined the prospects for oil production in Iraq in detail in 2012, our Central case projected that production would rise to over 6 mb/d in 2020 and 7.5 mb/d in 2030 (Figure 7) (IEA, 2012). Despite the fall in the oil price from 2014 and the rise of ISIL, Iraq’s production today lies close to this Central case. Looking ahead, production in 2030 lies midway between this Central case and the alternative Delayed case. This is partly because of the reductions in plateau targets for many of Iraq’s main fields and partly because of the greater level of competition for capital in other countries (such as tight oil in the United States). There are also a number of domestic challenges, such as adequate water supply and transport infrastructure, which need to be resolved to achieve further production growth. Iraqi NOCs have successfully expanded production at a number of the fields they operate but creating attractive financing conditions to encourage inward capital investment by international oil companies (IOCs) will remain critical to continue material levels of production growth.

Figure 7. Oil production outlook compared with the scenarios in Iraq Energy Outlook 2012

Oil production is expected to reach nearly 6 mb/d by 2030, midway between the Central and Delayed cases in the 2012 review.

Box 1. Reserves and resources

Estimates of ultimately recoverable oil resources are inherently subject to a large degree of uncertainty. Nonetheless, it is clear that Iraq’s contribution to global oil supply over the coming decades will not be limited by the size of its subsurface hydrocarbon potential. These resources are contained in three main hydrocarbon basins:

Northern Zagros Fold Belt, which includes the supergiant Kirkuk reservoir and the fields in the Kurdistan Regional Government area.

Mesopotamian Basin, where most of Iraq’s supergiant fields have been found. This is often separated into the “South” region near Basra and the “Centre” area that incorporates the alluvial plains around Baghdad.

Widyan Basin-Interior Platform, also known as the Western Desert (or “West”). This is the least explored of the three main basins and is thought to be more gas rather than oil prone.

Main hydrocarbon basins and fields in Iraq

Proven reserves alone are sufficient to support a major expansion in production. Reported reserves were steady at around 115 billion barrels throughout the 2000s (despite ongoing production) and in 2010 Iraq’s Ministry of Oil increased proven reserves by around 25% to 143 billion barrels. There have been a number of minor revisions since and the most recent estimate of proven reserves is just under 150 billion barrels. Iraq’s share of global proven reserves has fallen marginally since the 1990s, given larger revisions elsewhere, but it is still the fifth-largest proven reserves holder and the third-largest holder of conventional oil reserves.

According to data from the Ministry of Oil, Iraq’s proven reserves are spread across more than 70 fields. Yet, just four supergiant fields in the South region – Rumaila, West Qurna, Zubair and Majnoon – account for over 55% of total proven reserves. The other main proven reserve fields are East Baghdad in the Centre, and the long-standing producer, Kirkuk, in the North.

Reserves are only one element of the resource potential; anticipated reserve growth (to the extent not already included in the proven reserve data) and undiscovered volumes are also key factors. Much of Iraq remains unexplored or significantly under-explored compared with other major oil producing countries and so there remains a large potential for future discoveries. Our estimate of the remaining ultimately recoverable resources in Iraq stands at just over 200 billion barrels (including both crude oil and natural gas liquids).