Formation of a government in October raises prospects for continued growth of oil production in Iraq.
In a research note, the Arab Petroleum Investments Corp. (APICORP) says the development puts the country’s strategic goals of producing 6 million b/d of crude oil and exporting 4 million b/d by 2020 “within reach.”
Political infighting delayed formation of a government after elections held last May. In October, Parliament elected as president Barham Seleh of the Patriotic Union of Kurdistan political party. Saleh promptly named Abdul-Mahdi prime minister, which allowed oil industry veteran Thami Ghadhban to become oil minister. Ghadhban replaced Jabbar al-Luabi, who had been selected to head Iraq National Oil Co.
Leadership APICORP describes as “pragmatic” might ease political and bureaucratic hindrances to work in Iraq and raise cooperation between the federal government in Baghdad and Kurdish Regional Government (KRG) in Irbil.
Production gains
Despite political uncertainties while the government was forming and social unrest, Iraqi oil production grew this year, reaching 4.65 million b/d in October.
Further gains are in prospect, according to APICORP.
Halfaya field, operated by PetroChina, is expected to reach plateau production of 400,000 b/d next year after producing 250,000 b/d in September. Petronas’s Gharraf field, which produced 87,000 b/d in September, also will reach its plateau rate, 230,000 b/d, next year.
Both fields had been targeted to achieve plateau production in 2018.
Other fields that APICORP says have recorded production gains, with plateau targets versus September rates, are CNOOC’s Missan Group, 450,000 b/d vs. 220,000 b/d; Eni’s Zubair field, 850,000 b/d vs. 454,000 b/d; BP’s Rumaila field, 2.1 million b/d vs. 1.475 million b/d; and ExxonMobil’s West Qurna-1 field, 1.6 million b/d vs. 455,000 b/d.
Those fields are in southern Iraq, which accounts for most of the country’s 3.6 million b/d of exported oil.
In the north, a preliminary deal brokered by Mahdi and Ghadhban will allow 100,000 b/d of oil from Kirkuk field to flow through the KRG pipeline system connecting with the Iraq-Turkey pipeline to the Mediterranean port of Ceyhan. The Kirkuk oil will add to 400,000 b/d of oil produced in Kurdistan now transported through the KRG system.
Fields administered by the KRG—Atrush, Demir Dagh, Khor Mor, Khurmala Dome, Sarqala, Shaikan, Shewashan, Simrit, Swara Tika, Taq Taq, and Tawke (including Peshkabir), have production capacities totaling 430,700 b/d. The largest are Khurmala Dome, with 160,000 b/d, and Tawke-Peshkabir, with 130,000 b/d.
The KRG controlled Kirkuk field until federal forces seized it in October 2017. It suffered a further political setback when an independence referendum failed.
“The political crisis has yet to be fully resolved,” APICORP says.
Export prospects
A planned increase in capacity of the Kurdistan export pipeline to 1 million b/d from 700,000 b/d could provide a further outlet for Iraqi crude if Baghdad proceeds with plans to expand Kirkuk production. The field now produces below its assessed capacity rate of 450,000 b/d.
In May, BP and North Oil Co. signed a deal to increase Kirkuk capacity to 750,000 b/d and total capacity of six fields in the Kirkuk region to more than 1 million b/d.
Iraq’s draft budget for 2019 assumes an increase in exports to 3.8 million b/d. A new marine facility under consideration would increase southern exports to above 4 million b/d.
“Iraq’s capacity to continue to adjust and to look for new and diversified export routes will be key moving forwards,” APICORP says. “Greater security in key transit provinces, such as Anbar, and the experienced cadre of Iraqi oil technocrats should strengthen growth prospects.”
But the government’s ability to meet basic needs of Iraqis, including electrical power and employment, will be “a key test.”
