Iraqi Hydrocarbon Reserves and Production

According to the BP Statistical Review of World Energy 2012, Iraq holds the fifth largest proven petroleum reserves in the world, following Venezuela, Saudi Arabia, Canada and Iran, and only a fraction of the country's known fields are in development.

Around 75 percent of Iraq's proven oil reserves are concentrated in the three southern govern orates, with 25 percent in the middle and the north. On the back of a 2012 report by the International Energy Agency that claimed that Iraq would account for nearly half of the increase in global oil production between 2012-2035, the organisation's chief economist described Iraq as a dream for the energy industry, with "high oil reserves, easy geology and low production costs." Drilling success rates, at around 70%, are some of the highest in the world.

Many reports and sources estimate oil and natural gas reserves in Iraq and Iraqi Kurdistan in ways that conflict, agree, or simply differ. Reliable and relevant estimates are indicated and explained in the sections that follow.

= Oil =

Proven Reserves
The BP Statistical Review's estimate for proven reserves of crude oil rose to 143.1 billion barrels (bbl) at the end of 2011, up from 34 bbl in 1980, bringing the percentage of total global reserves to 8.7%. The major part of this increase in the estimates came during the 1980s, as can be seen from the following graph.

There have been three significant leaps in the estimate over this period.


 * In 1982, early in the war with Iran, reserves estimates nearly doubled from 32 to 59 bbl.
 * In 1987, as the Iraqi economy was suffering from the long war with Iran, and as it appeared that OPEC was about to base production quotas on  stated reserves, the figure jumped from 72 bbl to exactly 100 bbl.
 * In 1996, as the United Nations was finalising terms of the Oil For Food program which would allow Iraq to export oil again after a total ban for several years, the estimate jumped from 100 billion to 112 bbl.
 * In 2000, only months before the United Kingdom and the United States carried out bombing raids aimed at disabling Iraq's air defense network, the reserves estimate was calculated at 112.5 bbl.
 * In 2009, the same year in which Iraq assumed control of security in Baghdad's 'Green Zone', reserve estimates reached 115 bbl of oil, a figure that remained stable until December 2011.

However, as with other OPEC producers, it is not clear if the current estimate of 143.1 bbl also includes oil that has already been produced. The United States Geological Survey's World Petroleum Outlook of 2000 estimated that of the 100 bbl figure that was then being used, 22 bbl had already been produced, leaving only 78 bbl yet to be recovered from the proven reserves.

Nevertheless it should be noted that BP defines "proved reserves of oil" in its annual Statistical Review of World Energy, quoted in this publication, as "those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions [emphasis is report author's own]." BP also states that the estimates in their tables are compiled using: "a combination of primary official sources, third-party data from the OPEC Secretariat, Oil & Gas Journal and an independent estimate of Russian reserves based on information in the public domain."

Ultimately recoverable reserves
Given that a large portion of Iraq remains unexplored, there have been numerous claims of huge undiscovered reserves (oil thought to exist, and expected to become economically recoverable), to the tune of hundreds of billions of barrels. According to a Brookings Institute paper from 2003, the Petroleum Economist estimates that there may be as many as 200 bbl of oil in Iraq; the Federation of American Scientists estimates 215 bbl; a study by the Council on Foreign Relations and Rice University claimed that Iraq has 220 bbl of undiscovered oil. In 2003, Tareq Shafiq, a founding executive of the Iraq National Oil Company in the 1960s, endorsed a figure of 215 bbl as Iraq's potential reserves.

Production
BP's Statistical Review of World Energy shows the profound variations in oil production throughout the decade 2000-2009 and until 2010. Average daily production was 2.116 million barrels per day (bpd) in 2002, dropped to a low of 1.344 million in 2003, rose back to 2.03 million in 2004, and kept rising to eventually reach 2.798 million bpd in 2011.

The original production targets of the Iraq government of 12 million bpd of output by 2017 have since been downgraded and deemed unrealistic by the industry, and as of late 2012 the government was talking of 9 million bpd by 2020.A further threat to Iraq's output goals are the limitations imposed by production quotas set by OPEC, when Iraq eventually rejoins the organisation's quota system.

A report released by the International Energy Agency in 2012 lays out a 'central scenario', 'high case' and 'delayed case' for Iraq's future production profile towards 2035. According to this 'central scenario', Iraqi oil output would more than double between 2011-2020 to 6.1 mbpd, reaching 8.3 bpd by 2035, with the largest production increase coming from the cluster of super-giant fields around Basra in the south and from Kurdistan in the north. According to the projections, these levels of production could earn Iraq US $5 trillion in export revenues, however in order to realise these gains the country will need strengthened institutions and human capacity, sound long-term strategies for the energy sector and efficient and transparency management of revenues and spending.

= Gas =

As of 2012, Iraq's proven gas reserves stood at 3.6tcm, the majority of which exist as "non-associated gas" at the country's oil fields.

Proven Reserves
BP's estimate of proven natural gas reserves changed little from the end of 1990 to the end of 2010, increasing from 3.1 trillion cubic meters (tcm) in 1990 to 3.2 tcm in 2010. At the end of 2011 the estimate stood at 3.6 tcm.

Probable Reserves
According to the Energy Information Administration (EIA), probably Iraqi reserves have been estimated at 8.25-9 tcm, and a group of independent and international oil companies are working on more accurate estimates of these reserves. The EIA estimates that 70 percent of gas reserves lie in Basra governorate, and two-thirds of reserves exist as "associated gas" in oil fields, including Kirkuk in the north, and southern Nahr Umar, Majnoon, Halfaya, Nassiriya, Rumaila, West Qurna and Zubair. Just under 20% of known reserves are thought to be "non-associated", the majority of which are concentrated in the North, at the Ajil, Bai Hassan, Jambur, Chemchemal, Kor Mor, Khashem al-Ahmar, and al-Mansuriyah fields.

Production
BP's June 2011 statistical review of world energy shows a serious decline in natural gas production throughout the decade 2000-2009 and until 2010. From 2000 onwards, excluding gas flared or recycled, yearly production slowly dropped from 3.2 billion cubic meters (bcm) to 1.6 in 2003, 1 in 2004, to rise to 1.5 in 2006 and 1.9 in 2008, 1.3 in 2010 but rising again to 1.9bcm at the end of 2011.

=Kurdish Reserves and Production=

Oil
Estimates of petroleum reserves in the Kurdistan region are unofficial and often vary. In December 2011, United Press International (UPI) was one of the media sources that stated that Iraqi Kurdistan had an estimated 45 billion barrels (bbl) of oil (roughly the amount that the United Kingdom has produced from its North Sea fields). However Keith Myers of Richmond Energy Partners highlighted in a November 2012 letter to the Economist that this 45-billion-barrel figure first appeared in a presentation from by the Kurdistan regional government itself and refers not to recoverable oil but in fact to discovered oil in place. Myers pointed out that much of Kurdistan's oil exists in "tight" reservoirs and that the amount of oil likely to be produced in Kurdistan is closer to 11 bbl. By these estimates, Kurdistan holds less than 10 percent of the Iraq's total reserves, while the government is entitled to a 17% share of federal petroleum revenues.

While fluctuating production levels in 2012 remained modest compared to southern Iraq, at around 200,000 barrels per day (bpd) (expected to climb to 250,000 bpd by 2013), oil companies exploring in the region have seen high success rates. Depending on the level of international investment and accompanying technical expertise, the KRG Minister of Natural Resources announced his goal to reach 2 million bpd of production by 2019. KRG Prime Minister Nechirvan Idris Barzani announced at a 2012 conference in Erbil that the region hoped to reach the medium-term landmark of 1 million bpd in 2015.

Gas
There are no official estimates for total gas reserves in Iraqi Kurdistan, and those estimates that have been made vary significantly in size. The Kurdistan Regional Government (KRG) itself estimates the region's gas reserves at between 3 and 6 trillion cubic metres (tcm) and news portal UPI reported in November 2012 a figure for gas reserves of 3.36 tcm. However an estimate by the US Geological Survey puts total "yet-to-find" gas at 60 trillion cubic metres (tcm) of gas.

However the Kurdistan region's ability to monetise these reserves will depend on export infrastructure. A role has also been suggested for the region in supplying gas for the 'Southern Corridor' route (via the 'Nabucco' pipeline or one of the other competing proposals), a project aimed at diversifying gas supply routes to Western Europe. An Oil Ministry spokesman has said that initial gas supply for this route could be expected between 2015-2017 but progress depends on a resolution between the central government and the KRG over gas exports.

= References =