Iraq's oil production to boom over coming decadesby Arabian Oil & Gas Staff on Dec 26, 2012
Lionel Mok considers the current hype over Iraq and looks at why the country is expecting big developments for its oil and gas industry
Despite decades of war, civil unrest and a very recent, complete regime overhaul, Iraq has clamoured its way up to become the world’s third largest oil exporter.
With foreign and national investment on the rise, the country is expected to embark on a rapid economic expansion path that will dramatically reshape the future of global energy markets.
With increased exploration activity, construction and a growing community of service companies entering the multiple stages of the oil and gas supply chain, the country’s oil production is expected to soar.
National oil production growth is projected to account for approximately 45% of the anticipated growth in global output to 2035, based on the International Energy Agency’s (IEA) annual World Energy Outlook Special Report which focused on Iraq this year.
“Faced with the prospect of rising oil consumption we have to ask where the additional oil supply is coming from,” said Maria van der Hoeven, executive director of the IEA at a press conference which launched the organisation’s IEA Report. “And I can assure you it’s very tough to answer this question without Iraq.”
The country is estimated to have the fifth largest proven oil reserves in the world, but this could easily changes in coming years.
“Iraq is one of the most unexplored countries in the world, for decades and decades there was no exploration activity,” said Dr. Fatih Birol, the IEA’s chief economist and primary author of the report, at the conference.
“On top of that, both the oil and gas production costs are among the lowest in the world,” he continued. Low production costs, strong well productivity and high quality oil will continue to attract more investors into the Iraq market.
According to Ruba Husari, managing director of Iraq Insight who spoke at a Business Opportunities in Iraq forum at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) in November, the Iraqi federal government plans to invest US $14 billion into the country’s upstream sector in 2013, compared to the $7 billion it invested in 2012, and the $3 billion in 2011.
If such a massive increase in government expenditure is not a clear enough indication of the industry’s potential and expected growth, then perhaps the IEA’s projection that production will double to 6.1 million barrels per day (bpd) by 2020 is.
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