Oil & Gas Iraq makes huge oil discovery but faces Opec restrictions By Eva Levesque January 21, 2025, 5:56 PM Ahmed Saad/Reuters Mohammed Shia Al-Sudani, Iraq’s prime minister, has revealed plans for major oil, gas and petrochemical projects Large field in central Iraq Estimated output of 5,000bpd Pressure to comply with Opec Iraq has announced the discovery of a massive oil field expected to significantly increase the country’s hydrocarbon reserves, but Baghdad will face a number of challenges in its attempt to exploit the new resource. The field, located in the central part of the country, contains more than 2 billion barrels of medium and light crude oil, with a projected daily output of 5,000 barrels, according to the Iraqi news agency. Iraq, the second-largest Opec producer after Saudi Arabia, holds the world’s fifth-largest proven oil reserves, amounting to 145 billion barrels. This represents 17 percent of the Middle East proven reserves. Most of the country’s oil is in the southern Basra region, the Diyala region east of Baghdad, and north-eastern Kirkuk. The latest discovery is part of the south-eastern Baghdad field and was made in collaboration with EBS, based in China. Iraq’s goal is to boost its oil reserves to 160 billion barrels, as announced by oil minister Hayan Abdel Ghani last year and reported by Al Arabiya. Baghdad also aims to boost its oil production capacity to 6 million bpd by 2028. Iraq pumps 4 million barrels per day (bpd) of oil and has been singled out by Opec+ for its overproduction multiple times. The lack of compliance with quotas offsets the producer group’s efforts to push prices up. Iraq and UK sign $15bn deal to strengthen trade ties ‘It’s costing huge sums’ – Iraq may stop buying Iranian gas Iraq lowers ceiling to crack down on money laundering While its oil production is expected to rise by only 200,000 bpd by the end of 2026, under the Opec+ agreement Iraq has yet to compensate for overproduction since January 2024, which means that some existing fields will be constrained, according to analysts. “There is no space for new developments without cutting existing fields further,” James Forbes, London-based senior analyst for upstream oil at Facts Global Energy, told AGBI. Mohammed Shia Al-Sudani, Iraq’s prime minister, has said the country wants to ramp up exports and reduce its reliance on gas imports from its eastern neighbour Iran, which account for a third of its gas needs. But years of war, political instability, an inhospitable investment environment and rampant corruption have led to underinvestment in the sector. “There are also fiscal issues, as creating value from barrels is difficult,” Alexandre Araman, director at Wood Mackenzie, said. Western international companies have pulled back, and about one-third of Iraq’s proven reserves and two-thirds of current production are managed by Chinese companies. Oil exports represent more than 90 percent of Iraq’s state budget. The government is pushing to rebuild its economy while preparing for parliamentary elections this year. Since his election in 2022, Al-Sudani has been striving to regain the confidence of international investors, including introducing better contract terms for international oil companies compared to the previous technical service contracts. He has also engaged in diplomatic efforts with Iran’s geopolitical rivals, including a visit to Washington, although with limited success: US companies are cautiously re-entering Iraq’s energy sector. TotalEnergies of France was the first major to sign a significant $27 billion deal for multiple energy-related projects. BP of the UK signed a memorandum of understanding to rehabilitate and develop four oilfields operated by North Oil Company in Kirkuk. New Iraqi elections for the Council of Representatives – the country’s main legislative body – are scheduled for next year.
