A recent report by the Centre for Global Energy Studies (CGES) on the state of the Iraqi petroleum industry uncovered that foreign investments and western expertise will be vital to realising the potential of the Middle East’s petroleum industry.
CGES points out that the looting and vandalism that followed the two Gulf Wars caused great damage to oil installations. UN sanctions against Iraq added further damage due to the difficulties created in getting spare parts, and in performing well services.
“Foreign contractors have not been able to provide vital services due to the poor security conditions…and the oil sector, like everything else in Iraq, has suffered from the poor security environment,” stated the report.
“Field capacity in the north was not affected by the second Gulf War, but the continued attacks on the Iraq-Turkey export pipeline have kept actual production at 30-40% of the capacity of the northern fields,” the report continued.
The pre-2003 production capacity has not recovered and, despite the reconstruction efforts, a great deal of work is yet to be executed. US $50 billion will be needed to get Iraq’s oil industry back on its feet – US $40 billion for developing already discovered, but undeveloped, oilfields, and US $10 billion for exploration.
“The main reasons for the rate decline have been insufficient water for injection, the shutting of wells due to increasing water shortage, and poor reservoir management,” said the CGES.
Oil and gas investment opportunities in Iraq range from immediate needs, to medium and long-term requirements. While many projects are available for immediate execution, others will have to await the passing of the Federal Oil and Gas Law that was introduced only recently.
