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EIC predicts huge investment in Iraq over next five years

Hydrocarbon Engineering,

The EIC has predicted in it’s latest report that Iraq should see a minimum of US$ 50 billion in investment over the next five years as security in the country gradually improves. In spite of the problems in the country, such as political instability and an unsettled investment climate, the country has huge hydrocarbon potential.

This in part because the country has very undeveloped hydrocarbon reserves, fewer than ten wells have been drilled annually since 1980 and as of 2011 the country was only producing 2.65 million bpd of oil. The report estimates that if all deals signed during the country’s oil licensing rounds are completed production could rise as high as 8 million bpd.

One of the problems facing the country is a lack of definitive revenue sharing between the government and IOC’s, and a lack of federal oil investment and hydrocarbon laws.

The security situation has been assessed and the situation has improved markedly as the capabilities of the security services have improved, but energy infrastructure is still a target for insurgents.

Infrastructure also remains an issue, with the pipeline network fragmented and insufficient to reach international markets. The downstream refining sector is also suffering from a lack of capacity which just three refineries producing most of the nation’s oil. In spite of the vast reserves in the country, Iraq is very dependent upon imported oil and still cannot keep pace with demand. The power sector is also insufficiently developed to keep pace with demand, leading to frequent power cuts.

Dr Phil Goddard, Director of Consultancy and the main author of the report said, “Whereas previously such potential was held back by a lack of security, political instability and harsh contractual terms, the prevailing trends are positive ones with our report showing significant signs of progress and opportunities for international investment. Tackling Iraq requires patience, endurance and initiative, but the rewards for perseverance are potentially prolific as our $50 billion suggests.”

Adapted from press release by Peter Farrell.

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