Oil & Gas

The utilising of Iraq's valuable oil and natural gas resources holds the key to the wealth and prosperity of the country. The oil sector dominates the Iraqi economy, with oil exports traditionally being responsible for around three quarters of the country's gross domestic product (GDP). The sector also accounts for roughly 90 per cent of the country's foreign exchange earnings.

Iraq has an estimated 112 billion barrels of potential oil resources, second only to Saudi Arabia in the entire world. Many within the petroleum sector feel that Iraq's undiscovered resources could increase the quantity of oil held to as much as 200 billion barrels. The country also has world-class natural gas resources, estimated at 110 trillion cubic feet. It is felt that this figure could increase significantly as exploration continues.

It has been estimated that with its natural resources Iraq has the potential to earn between $10 billion and $15 billion over the next few years. Estimates for oil export revenue generated in January 2004 were approximately $1.3 billion, with the re-establishment of the country's pre-1991 production capacity of 3.5 million barrels per day deemed a high economic priority. One aim is to be producing six million barrels per day by 2010; this goal has been based on the country's natural resources and estimated potential undiscovered resources. The production goal defined by the former Coalition Provisional Authority (CPA) is two million barrels per day.

In the 1990s Iraq was able to increase its oil production, though this was accomplished largely through the use of improvised maintenance techniques, randomly located spare parts and the cannibalising of the country's equipment supplies, in particular at Iraq's refineries. The infrastructure of Iraq's oil and gas industry is heavily outdated, requiring a sizeable investment to repair and upgrade. Additionally, the development of dozens of designated oil fields will require a massive investment.

It is felt that the Iraqi Ministry of Oil will need to improve its management of the sector in order to meet international best practices, with the possible need to retrain the industry's 70,000 workers in order to function more efficiently.

Iraq's domestic production of kerosene, gasoline, LPG and diesel fuel does not currently meet the country's demand. Significant investment is needed to reach required levels of self-sufficiency.