• 4 minutes Trump will meet with executives in the energy industry to discuss the impact of COVID-19
  • 8 minutes Charts of COVID-19 Fatality Rate by Age and Sex
  • 11 minutes Why Trump Is Right to Re-Open the Economy
  • 13 minutes Its going to be an oil bloodbath
  • 20 mins Ten days ago Trump sent New York Hydroxychloroquine. Being administered to infected. Covid deaths dropped last few days. Fewer on ventilators. Hydroxychloroquine "Cause and Effect" ?
  • 1 hour US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 15 hours While China was covering up Covid-19 it went on an international buying spree for ventilators and masks. From Jan 7th until the end of February China bought 2.2 Billion masks !
  • 6 hours Mr
  • 3 hours Free market or Freeloading off the work of others?
  • 4 hours China Takes Axe To Alternative Energy Funding, Slashing Subsidies For Solar And Wind
  • 5 hours Marine based energy generation
  • 17 hours What If ‘We’d Adopted A More Conventional Response To This Epidemic?’
  • 18 hours How to Create a Pandemic
  • 19 hours Apple to Bypass Internet and Beam Directly to Phones
  • 10 hours Which producers will shut in first?
  • 17 hours Real Death Toll In CCP Virus May Be 12X Official Toll
Alt Text

North Sea Oil Faces Crisis

North Sea oil has a…

Rystad Energy

Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products. Rystad Energy’s…

More Info

Premium Content

Is Iraq Too Risky For Oil Majors?

The US and Iran seem to be have stepped back from the brink of armed conflict, at least for now, but many oil and gas companies nevertheless face serious decisions regarding their short and mid-term plans in neighboring Iraq, where tensions remain high.

There are still some 5000 American troops stationed in Iraq, but their continued presence there has become uncertain. (See Rystad Energy press release from January 10, 2020.)

Iraqi oil production averaged more than 4.8 million barrels per day (bpd) in 2019, of which about 1.8 million bpd stemmed from the country’s domestic and state-owned players. International oil companies were thus responsible for the lion’s share of production – in the region of 3 million bpd. Companies headquartered in China collectively produced more than 1 million bpd, E&Ps from the United Kingdom produced beyond 630,000 bpd, and Russian players had combined average output of around 330,000 bpd. PetroChina and BP had the largest working interest production for overseas companies, at 880,000 and 606,000 bpd, respectively. US-based companies collectively produced about 180,000 bpd on average last year, led by ExxonMobil with nearly 106,000 bpd.

“ExxonMobil spent more than $250 million last year on its Iraqi upstream operations, and we have projected that this number would likely be ramped up by an additional $150 million over the next five years as the company aims to increase production through 2024. However, any spending plans in Iraq are likely to be under review given the current circumstances,” says Matthew Fitzsimmons, VP Oilfield Research at Rystad Energy. He reasons that ExxonMobil could ultimately decide to divert a portion of its Iraqi spending budget to other regions where the company is investing heavily in production growth, such as Guyana’s offshore sector and the US shale industry. Related: What The Trade War Ceasefire Means For Oil

Among the major oil companies in Iraq, BP has emerged as a clear leader. Before the recent flaring of tensions, BP had been expected to allocate about 4% of its annual $25.6 billion global oil and gas spending budget towards projects in Iraq. The company has managed an ambitious water injection program that is helping to boost its output and make BP the third largest producer in Iraq, but the fate of this program is now uncertain.  

“Continued tensions in the region could see BP slow their water injection program down, and limit the high-side of production for the company and for other international players in southern Iraq,” says Fitzsimmons.

After spending nearly $1 billion in 2019 on its Rumaila North and South project, BP was expected to raise its capex to $1.2 billion by 2024. This would have seen BP’s onshore Iraqi oil production eclipse 725,000 bpd by 2024. “Putting this into context, that tally would be about 70,000 bpd higher than BP is poised to produce from the US shale sector in 2024, and Iraq would emerge as the company’s largest production of one energy resource type in a single country. Only by combining offshore, onshore and shale in the US, could BP’s working interest production in there outweigh its expected interests in Iraq,” states Fitzsimmons.

By Rystad Energy

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage






Leave a comment
  • Mamdouh Salameh on January 16 2020 said:
    It is risky for American and western oil companies as long as there is an American military presence in the country. Chinese and Russian oil companies would continue to operate peacefully in the country helping Iraq to reach its full oil potential.

    Iraq has become a battleground for influence between Iran and the United States. Iran’s strategy in coming days and months will aim to force the eviction of American forces from Iraq. Losing Iraq will be a significant strategic victory for Iran. This will be eventually followed by the withdrawal of all American forces from the Middle East.

    President Trump is threatening Iraq with sanctions if it evicts American forces from its territory. He is threatening Iraq with sanctions including blocking access to Iraq’s US-based account where all the oil revenues are kept. This simply demonstrates the most sinister imperialism based on the premise that if Iraq evicts US forces the United States will strangle it economically.

    As in Syria, the US uses the threat of ISIS to justify staying in Iraq. ISIS is dead and even if it was alive, the Iraqi Army and the militia supported by Iran are more than capable of demolishing their remnants.

    The instability in Iraq dates back to the aftermath of the US invasion of Iraq in 2003. Under the late Saddam Hussein, Iraq was the most stable country in the Middle East with Sunnis and Shias living in peace. The United States has been the source of trouble not only in Iraq but the whole Middle East. Let us hope the Saudis and the Gulf people will realize this fact before it is too late.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News