Wednesday, July 12, 2023

"Iraq Takes First Step Towards Becoming The World’s Biggest Oil Producer"

 From OilPrice, July 11:

  • Iraq’s parliamentary oil and gas committee plans to increase the country’s oil production to more than five million barrels per day.
  • Theoretically, Iraq could lift oil production to 13 million bpd.

[and pro forma, I'm Miss America*]

  • Endemic corruption has strongly impacted growth in oil production in the world’s last major underdeveloped oil frontier.

Iraq’s parliamentary oil and gas committee plans to increase the country’s oil production to more than five million barrels per day, according to the release of committee minutes last week. As analysed in full in my new book on the new global oil market order, not only could this be done with relative ease by Iraq but it could also easily be the precursor to further oil production increases to 13 million barrels per day (bpd) if handled correctly. This would make Iraq the biggest oil producer in the world.

In broad terms, Iraq remains the greatest relatively underdeveloped oil frontier in the world. Officially, according to the EIA, it holds a very conservatively-estimated 145 billion barrels of proved crude oil reserves (nearly 18 percent of the Middle East’s total, and the fifth biggest on the planet). Unofficially, it is extremely likely that it holds much more oil than this. In October 2010, Iraq’s Oil Ministry increased its own figure for the country’s proven reserves to 143 billion barrels. However, at the same time as producing the official reserves figures, the Oil Ministry stated that Iraq’s undiscovered resources amounted to around 215 billion barrels. This was also a figure that had been arrived at in a 1997 detailed study by respected oil and gas firm, Petrolog. Even this figure, though, did not include the parts of northern Iraq in the semi-autonomous region of Kurdistan. This meant, as highlighted by the IEA, that most of them had been drilled during a period before the 1970s began when technical limits and low oil prices gave a narrower definition of what constituted a commercially successful well than would be the case now. Overall, the IEA underlined that the level of ultimately recoverable resources across all of Iraq (including the Kurdistan region) at around 246 billion barrels (crude and natural gas liquids).

Given the true scale of Iraq’s oil reserves – and the fact that the average lifting cost per barrel of oil in the country is US$1-2 pb (the lowest in the world, along with Iran and Saudi Arabia) – what sort of oil output could reasonably be expected? Back in 2013, the Integrated National Energy Strategy (INES) was produced, and this analysed in detail three realistic forward oil production profiles for Iraq and what each would involve. As also analysed in my new book, the INES’ best-case scenario was for crude oil production capacity to increase to 13 million bpd (at that point, by 2017), peaking at around that level until 2023, and finally gradually declining to around 10 million bpd for a long-sustained period thereafter. The mid-range production scenario was for Iraq to reach 9 million bpd (at that point, by 2020), and the worst-case INES scenario was for production to reach 6 million bpd (at that point, by 2020). Consequently, the 5 million bpd figure announced last week can be regarded as the first easily achievable stepping stone toward those figures. Indeed, according to Iraq’s Oil Minister, Hayan Abdel-Ghani, last week, the country’s oil production capacity already stands above this level - at 5.4 million bpd – although it is still only producing around 4.3-4.5 million bpd overall....

*Here's the 2017 iteration of "Insurance and Nakedness": The Guy Who Saw the 2007-2009 Meltdown Coming and Described Exactly What Would Happen"
Fifteen years ago today, April 22, 2002 I printed this amazing prognosis.
The whole thing is genius but just a single comment on GAAP vs. non-GAAP accounting makes it worth the price of admission:
Pro forma, I'm Miss America
A repost from Tuesday, February 16, 2010:

I collect prognostications.
This weekend I was going through a file of forecasts that various people had made from 2000 through 2005 and saw one that I had printed out on April 22, 2002.
Truly amazing.
Insurance and Nakedness