Iraq Will Deliver Third-Biggest Chunk of New Oil Over Next Decade, IEA Says

(Bloomberg) -- Iraq will be the third-biggest provider of new oil supplies over the next decade, boosting its production by almost 30 percent, according to the International Energy Agency.

The OPEC member will raise output to almost 6 million barrels a day by 2030, overtaking Canada as the world’s fourth-largest producer, as it continues to rehabilitate an oil industry ravaged by decades of conflict and sanctions, the IEA said Thursday. Only the U.S. and Brazil will add more output in the period.

Still, the growth rate is slower than that seen earlier this decade as Iraq faces competition for foreign investment and expertise, and struggles to inject enough water to maintain pressure at oil reservoirs, the IEA said in a report. The outlook was downgraded from the agency’s last assessment seven years ago, when it projected Iraq would pump 7.5 million barrels a day by 2030.

“Iraq’s potential is huge but the road to increased production is not without obstacles,” said the Paris-based organization, which advises most of the world’s major economies on energy policy. “Myriad above-ground hurdles can add significantly to the cost and difficulty of executing hydrocarbon projects.”

Mixed Results

While a number of international oil companies such as BP Plc, Exxon Mobil Corp. and Royal Dutch Shell Plc signed contracts earlier this decade to develop Iraq’s abundant reserves, the results have been mixed. Shell decided in 2017 to quit the giant Majnoon oil field because of its discontent with the contractual terms.

Investment in Iraq’s oil and gas sector has subsided from a peak of just over $20 billion in 2014 to about $12 billion a year currently, the IEA said. However, reductions in project costs have cushioned the impact of these cutbacks on output.

Water supplies are one of the industry’s most acute needs, because relatively low recovery rates mean that Iraqi oil fields rely on the injection of liquids to sustain reservoir pressure. Demand for water in Iraq’s oil sector will climb by 60 percent to more than 8 million barrels a day by 2030, the IEA estimates.

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