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Iraq Oil and Gas report Q4 2012

Friday, Nov 09, 2012

Research and Markets ( has announced the addition of the "Iraq Oil and Gas Report Q4 2012" report to their offering.

“Iraq Oil and Gas Report Q4 2012”

Iraq has the greatest potential for oil production growth in the Middle East region. The lofty government-set goals may remain out of reach, thanks to infrastructure issues, political instability, investment lag and likely conflicts with OPEC, but production could well exceed 6mn barrels per day (b/d) by 2017 and be heading towards 8mn b/d by 2021. Current forecasts among third parties vary wildly, with no close consensus likely until IOCs bring key projects nearer to completion.

We Highlight the Following Trends and Developments in Iraq's Oil and Gas Sector:

- Unappealing licensing terms, regulatory uncertainty and ongoing security concerns continue to undermine the development of Iraq's post-war oil industry. Baghdad's last licensing round drew just three successful bids. Without improved terms and increased international oil company (IOC) interest, Iraq will find it very difficult to meet its extremely ambitious oil production target of 11mn b/d by 2020.

- Iraqi crude oil production in August 2012 reached its highest level in more than three decades at 3.07mn b/d. Increased shipments from the southern ports also lifted exports to a new high of 2.57mn b/d, according to Paris-based International Energy Agency (IEA). Additional output is coming from a number of joint venture projects, including ExxonMobil's West Qurna-1, Eni's Zubair field and the China National Petroleum Corporation (CNPC)-led Halfaya project.

- BMI sees Iraq crossing the 6mn b/d oil production mark by 2017, with the largest contributions being made by the major southern fields, such as Rumaila, Zubair and West Qurna-I. Much of this increase depends on the successful execution of the water injection project being led by USbased ExxonMobil. Disagreements between Baghdad and Exxon over the US group's interest in Kurdish oil could slow West Quma progress.

- Consumption of oil is set to exceed 1mn b/d by 2018, based on higher demand for refined fuels as the economy expands and from the country's growing power needs. The huge increase in crude production and export volumes implies a spectacular rise in state revenues, which should filter through to much greater macroeconomic strength.

- Iraq's refining segment may struggle to attract the investment necessary to substantially reduce imports of refined fuels. We have pencilled in an ongoing programme of refinery expansion, but plans are somewhat vague and domestic capacity looks set to remain well below refined products consumption levels.

- Iraq's natural gas sector has substantial potential, both through the capture of associated gas (through the Basra Gas joint venture) and through the development of non-associated fields. We see gas output ramping up significantly after 2013, with small exports starting as early as 2017.

We are assuming an average OPEC basket oil price for 2012 of US$107.05/bbl, falling to US$99.10 in 2013. By 2016, we expect the price to average US$93.25, edging lower to US$91.50/bbl by 2021. Based on these assumptions and BMI production forecasts, Iraq's oil revenues should increase from an estimated US$86.9bn in 2012 to US$221.5bn by 2021.

Source: Business Wire

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