Presentation delivered before The 4th Iraqi Petroleum Conference

Iraq: Exploration, Field Development & Operation Challenges Organized by

Target Exploration13 &14 September 2012,

The Imperial College, London, UK

Iraq’s Petroleum Sector Development- Opportunities & Challenges

By Ahmed Mousa Jiyad

 Iraq/ Development Consultancy and ResearchNorway

Phone: +46 5659 5699 Email: mou-jiya@online.no

Augments Petroleum Proven Reserves

Enhance Production Capacities

Expand Export Capacities and Diversify Export Outlets

Increase Gas Utilization & Reduce Gas Flaring

Develop Refining Capacities

FDI-IOCs Involvement

NES, NDP and Managing the Plenty

Main Determinants Facing Iraq’s Petroleum Strategy

The Issues

1- Augments Petroleum Proven Reserves

Current Proven Reserves: 143 bbl; 66 oilfields;

65%

28%

7%

Oil in Place Reserves Remaining Proven Reserves Accumulated prod., at 1/1/2010

Enhance The

Recovery Factor

Deep Drilling

MoO Exploration

program

The 4th/5th Bid

Rounds

2- Enhance Production Capacities

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Rumaila WQ1 Zubair Missan

Prod

uctio

n-m

bd

Re P

PPP

DPP

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

WQ2

Majnoon

Halfaya

Garraf

Badra

Qaiyara

Najma

AlAhdab

Prod

uctio

n (m

bd) DP

PPP (7, 9, 10, 13 Ys)

DPP

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

0

2

4

6

8

10

12

TP BFTP GFTP

Prod

uctio

n-M

bd

PROVEN RESERVES, TOTAL & INCREMENTAL PRODUCTION CAPACITY

14 Oilfields67.3 bbls (58.5%) 1.7 mbd-CPC

11.7 mbd-TPC

10.0 mbd-IPCMoO plan

(mbd): 2011 –

2.752012 – 3.32013 – 4.52014 – 6.5

Gas Reserves & Availability

Proven gas reserves:112 tcf- trillion cubic feet, 71% associated gas, 20% non-associated and 9% dome gas. Geographically: 30% in the north and 70% in the south/middle Iraq.

Probable reserves are estimated to be 275-300 tcf. Associated Gas: 1mbd oil gives 0.800Bcfd-A 12.5 mbd oil gives 10.0 Bcfd

Gas Fields Bid Round: Akkas, Mansuriya and Siba. Total 7.4 tcf proven Reserves. Production capacity of 820 mcfd; PPPs: 9-13; P/R ratio:~25 years.

Gas Flaring: currently Iraq is producing 1.5 bcfd, of which some 700 mcfd flares.

 

Oilfield

N/IOCsConsortium (75%)

St/Pr(25%)

CP-mbd(BLP)

PPTs-mbd/ Y

R F $/b)

S.B$m

IPT-FCP000bd

Reservebillionbarrels

MEO $m

IR$bln

AlAhdad CNPC (100) SOMO 0.000

0.115a/*Y

6 3 * 1.00c 350 1.6

Rumaila (N&S)

BP (50.666), CNPC (49.333)

SOMO 1.066e

2.850/7Y

2 500b

10%BLP

17.8 300 15-20

West Qurna1

Exxon Mobil (80), Shell (20)

OEC 0.3000.244f

2.350/2.850 7Y

1.92.0

100

10%BLP

8.6 200 40-50

Zubair Eni (43.747), Oxy (31.253), Kogas (25)

MOC 0.2000.183f

1.200/7Y

2 100

10%BLP

4.1 200 35

Missan (3 oilfields)

CNOOC (85)TAPO (15)

IDC 0.100

0.450/*Y

2.30

300b

10%BLP

2.5 200 *

West Qurna2

Lukoil (75), Statoil (25)

NOC 0.000

1.800/13Y

1.15

150

120 12.876

250 30

Majnoon Shell (60), Petronas (40)

MOC 0.045d

1.800/10Y

1.39

150

175 12.580

300 *

Halfaya CNPC (50), Total (25)Petronas (25),

SOC 0.003

0.535/13Y

1.40

150

70 4.098 200 *

Garraf Petronas (60), Japex (40)

SOC 0.000

0.230/13Y

1.49

100

35 0.863 150 7-8

Badra Gazprom (40), Kogas (30), Petronas (20) TPAO (10),

OEC 0.000

0.170/7Y

5.50

100

15 0.1091.203g

100 3.52

Qaiyara Sonangol (100) SOC 0.000

0.120/9Y

5.00

100

30 0.807 150 2.0

Najma Sonangol (100) IDC 0.000

0.110/9Y

6.00

100

20 0.858 100 *

Total

    1.698

11.730 -- 1853

---- 67.285

2500 *

3- Expand Export Capacities and Diversify Export Outlets MoO Plan

2011 – 2.42012 – 3.25

2013 – 5.09

2014 – 5.65

Export outlets (mbd)NAG: 8.5 (5SPMs, BoT & KoT)Syria: 4.5 (Rehab1.25; new 1.25 L/m crude; 1.5 Hc)+ gas pipelineTurkey: 1.6 (Upgrade K-C) + new oil and gas pipelines!Nabucco??Jordan: 10,000 bd (Trucks)

IIS gas pipeline?IPSA- oil pipelie?Zerga-Jordan?

ICOEE

4- Increase Gas Utilization & Reduce Gas Flaring

MoO Plan Natural

gas production capacity (mmcf/d):

2011 – 1,775

2012 – 2,375

2013 – 3,075

2014 – 4,500

• BGC- LNGBR1• IOCs obligationsBR2• Free gas fieldsBR3 • Priority for gas fields.

Possibility for Export of Dry GasBR4

5-Developing Refining Capacity

MoO Plan: Refining capacity (000bd-input)

Four new major refineriesNassiriya (300,000 bd)- $8bn; Missan (150,000 bd)- $5bnKirkuk (150,000 bd)-$5bn; Karbala (140,000 bd)-ca$5bn

The legal frameworks are outlined in two laws: Investment Law (No. 13 of 2006) through NIC and the Refinery Investment Law (No. 64 of 2007). Contractual terms outlined in 17 January 2012 invitation offer from MoO, London Conf., May ???

In addition to these new capacities the ones to be renovated are Baiji, north of Baghdad, the Doura refinery in southern Baghdad and the Basra refinery in the south.

2011 2012 2013 2014575 640 680 700

6- FDI & IOCs Involvement

The State shall guarantee the reform of the Iraqi economy in accordance with modern economic principles to insure the full investment of its resources, diversification of its sources, and the encouragement and development of the private sector. §25

The State shall guarantee the encouragement of investment in the various sectors, and this shall be regulated by law. §26.

Using the most advanced techniques of the market principles and encouraging investment to develop oil and gas wealth. §112 (2nd).

The Constitution

al Principles

$100bn to develop upstream oil and gas fields;

$40bn to develop the gas industry;

$30bn to increase refinery capacity;

$30bn to expand export facilities.

Iraq’s Investment Requirements in the Petroleum Sector

$200 billion

7-NES, NDP and Managing the Plenty

National Energy Strategy NES is drafted by a committee composed of the ministries of Oil, Electricity, Planning, and Finance, DPM/E (HS) and PMAC (TG & others) . The World Bank financed the study and also assisting in its formulation .

IEA-WEO 2012

"This strategy is going to provide the groundwork for which is the optimum scenario for Iraq to follow," "We are looking 20 years from now." (TG-PMAC)

      

HRDHRD

LRD LRDLIPCU

LGDOHGDO

HIPCU

Honeymoon Risky

Delicate balance

Nightmare

Where stands Iraqi today? Iraq-HIPCU

Iraq-LIPCU

HGDO

LGDO

Honeymo

on

FRD

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

0

50

100

150

200

250

300

350

Export mbd-LHSRev$/d (mil)-RHS

Conceptual “Situation/ Strategy” MatrixProactive NOT Reactive

Situation /Strategy components

Honey-moon

Delicate balance Risky Nightmare

Situation Analysis/ Description

Impact /Results Assessment (Measurement units, verifications, norms, etc)

Policy Options:(What to do, when, how, etc)

Annexes: (Methodology, data, scenarios, models etc,)

Institutional and Legal Frameworks: (Governance, Transparency and Accountability)

8-Main Determinants Facing Iraq’s Petroleum Strategy

1- Legal: Constitution, FOGL, MoO, INOC, provincial law/KRG etc;

2- Institutional: who do what under what authority..,;

3- Human resources: de facto and de jure.., de-capacitating; management and coordination

4- Logistical (sector specific) and infrastructure;

5- Structural (Macroeconomics): Absorptive capacity limitations, Dutch disease and resource curse attacks;

6- Political (domestic);

7-Geopolitical / regional;

8- International;9- Security;10- Oilfields

specifics;