Iraq’s current “highly ambitious plans” to expand oil production are unlikely to be fully realized given political, security, operational and infrastructure challenges, according to a new report, Fields of Dreams: The Great Iraqi Oil Rush—Its Potential, Challenges, and Limits by IHS Cambridge Energy Research Associates (IHS CERA). Iraq currently plans to expand production to as much as 12 million barrels per day (bpd) in the next six to seven years.
The report identifies infrastructure and logistics as “major challenges.” Iraq is responsible for providing the infrastructure needed to receive the extra oil but its plans for providing a “complex network of capital-intensive infrastructure”—from ports and roads to power and water crucial for operations—in synchronization with the development oil fields are not known, representing a major potential bottleneck.
“Iraq’s expansion timetable appears extraordinarily ambitious in comparison to the recently completed capacity increase in Saudi Arabia,” says Bahree. “Saudi Arabia has significant security and infrastructure advantages yet it took Saudi Arabia between four and five years to expand its net output capacity by some 2 million barrels per day. Iraq will certainly be challenged to match this pace, much less exceed it.”
Though Iraq is unlikely to meet its “very stretch target” of elevating its capacity to 12mbd in six to seven years, the expansion of its production capacity still represents a significant increase with strong implications for OPEC and the regional balance, the report finds.
IHS CERA’s 2009 reference case for global liquid productive capacity shows growth through 2030 to around 115 million barrels per day (mbd) and finds no evidence of a peak in supply appearing before that time