Despite some supply disruptions and security threats, Iraq was the second leading contributor to global oil supply growth in 2014, behind only the US, according to the US Energy Information Administration (EIA). Iraq accounted for almost 60% of production growth among the Organisation of Petroleum Exporting Countries (OPEC), although this growth was more than offset by production declines in other OPEC countries. Iraq’s crude oil production, which averaged almost 3.4 million bpd in 2014, was 330 000 bpd above 2013 levels, despite the heightened security threat from the Islamic State of Iraq and the Levant (ISIL) and disrupted production in northern Iraq.
ISIL attacks in northern Iraq in early June 2014 reduced northern Iraqi production and refinery operations (not including the Iraqi Kurdistan Region). These attacks did not affect production in the Iraqi Kurdistan Region in northern Iraq, although fighting came very close to fields produced under the Kurdistan Regional Government (KRG) – the Khurmala Dome and Shaikan. Some oil companies were forced to abandon exploration projects, which could delay future development.
Iraq’s crude oil production fell to its lowest monthly levels for the year during July and August following the start of the ISIL offensive. From August to December, Iraq’s production grew by almost 600 000 bpd, reflecting increased output from fields in southern Iraq and in the Iraqi Kurdistan Region following infrastructure expansions and a partial recovery in northern Kirkuk production.
In December, Iraq’s central government and the KRG reached a deal on oil exports and revenues, which could facilitate significant increases in production and exports from northern fields. Notwithstanding this agreement, the threat of ISIL on northern production and exports is still present. Barring any major supply disruption, EIA expects that Iraq will continue to be the largest source of production growth within OPEC over the next two years.
Adapted from a press release by Emma McAleavey.
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