Iraq’s upstream ambitions remain undimmed: APICORP

iraq 211Iraq’s oil sector has been characterised by steady progress despite a raft of political, security and infrastructural challenges, according to Arab Petroleum Investments Corporation’s (APICORP) energy report

The ‘Monthly Energy Commentary - Iraq oil: Upstream ambitions undimmed, infrastructure remains’ said that Iraq’s oil sector has been criticised for missed targets and bureaucratic interference.

“Production gains have lifted Iraq into the top flight of global oil producers, overtaking Iran and second now only to Saudi Arabia within OPEC. This progress has been achieved despite internal political fighting, red tape and delays for operators, where as recently as October 2018, total production reached new heights of 4.65mb/d,” noted APICORP.

Southern oil projects ramp up

In Iraq’s south, with the bulk of the country’s 3.6mb/d of oil exports, production has edged higher in 2018, whereas average demand growth for the first seven months was only 7kb/d year on year.

Two major southern oil projects that were scheduled to hit plateau output by the end of 2018 – Halfaya and Gharraf – are now expected to achieve contract plateau output in 2019.

Northern exports’ first major step

While the south has driven capacity growth for years, northern oil exports, from the area administered by the Kurdistan Regional Government (KRG), are also set for a boost following the clinching of a preliminary deal between the KRG government in Irbil and the federal government in Baghdad.

Plans to boost the throughput capacity of the Irbil export pipeline from 700k b/d to 1mb/d is also designed to offer a durable export route for federal crude. If oil ministry plans for an expansion of the Kirkuk field were to go ahead, spare capacity on the KRG pipeline would be an obvious fit for Kirkuk exports, which have dwindled in recent years.

APICORP said that Iraq is set to continue its upstream growth story in 2019 despite persistent challenges, inherent to post-war reconstruction and political reconciliation process. The new government of Prime Minister Abdul-Mahdi has demonstrated a strong degree of pragmatism aimed at resolving political differences in the name of maximising output and export revenue. Declining oil prices since early October challenged spending levels – but Iraq has shown resilience in the face of tighter budgets.

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