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Interview on Iraq energy market

1 Mar 2009

Enerdata has just released the new Iraq energy report.

Pierre Buisson, economist at Enerdata in charge of energy market intelligence, unveils the latest energy market evolutions

What is the current energy sector organisation in Iraq ?

Today, the Iraqi energy sector is regulated by two ministries, the Ministry of Oil and the Ministry of Electricity. These governmental institutions control through many public companies the entire sector from production to sale. However, a small number of foreign companies exploit some gas and oil fields through production share agreements that are regulated by the government and the Iraq Hydrocarbon Law.

The electricity sector seems to suffer from many lacks in the country ?

Indeed, the country only manages to satisfy 50% of the electricity demand. The many attacks on the network and the production units, associated with the outdated state of them cause many cuts. In Baghdad, the electricity on the domestic network is only available 8 hours per day and outside the capital between 12 and 14 hours per day. Nevertheless, the country has launched many investments to double its production capacity in the next few years, which should improve the situation.

Did the country retrieve its oil production level of 2000 ?

Even if the country has not retrieved yet its oil production level of 2000 (130 Mt), we are close to it with 106 Mt produced in 2007. In 2003, the production level fell to 66 Mt, but since this date the country has managed to increase its production and by the way to increase its oil exports. Today, the oil exports approach the pre-war peak of 2000 (100 Mt) with 82 Mt exported in 2007, and the government aims to increase the exports in the near term attracting major oil companies.

In this connection, a new licensing round for the exploitation of oil fields has been launched late December after the cancelation of the previous one, could you tell us more about it ?

The Iraqi proven crude oil reserves are the third most important in the world and the government wishes to boost the oil production allowing the exploitation of oil fields to foreign companies. Exploitation contracts were planned to be signed mid-2008 with six oil majors but the negotiations had stalled for so long that they were cancelled. So, the government has launched a new licensing round late December to replace the previous one and expects to sign the contracts by December 2009. These exploitation contracts concern ten oilfields and one gasfield, in which the huge Majnoon and Western Qurna 2 fields in the south. These agreements could increase the country’s production of 2.5 Mbl/day by 2013.

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