Speech by British Ambassador, Michael Aron at the Kurdistan-Iraq: Oil & Gas Conference
Mr Chairman, Prime Minister, Ladies and Gentlemen. Thank you for inviting me to speak at Kurdistan-Iraq Oil & Gas 2011. The timing could hardly be better.. as the country with greatest potential for increasing conventional oil production in the medium term, the trajectory of Iraq’s future oil and gas production is of considerable importance to global energy markets. British Companies are actively involved in Iraq and I look forward to hearing their perspective, and the views of Ministers and others, on doing business here and their expectations for the future.
Oil is of course central domestically to Iraq. It currently accounts for around 65% of GDP and 95% of federal budget revenue. Oil will be the single largest source of government revenue for years to come. But Iraq’s oil production – currently around 2.8mbd – is still only a fraction of its potential. Of this, around 2.2mbd is currently being exported. On IEA figures – that is without April’s increase in audited reserves to 143 billion barrels – Iraq has the fourth largest proven reserves of oil in the world. While the government’s declared aim to increase production to 12mbd by 2017 will be challenging, it demonstrates the level of ambition and scale of opportunity for companies and investors.
Oil grabs the headlines, but development of Iraq’s gas fields is also crucial and time sensitive. Once domestic demand is satisfied, the huge gas resources in Iraq give Baghdad and Erbil the opportunity to set a long-term strategic energy relationship with Turkey and Europe through the Nabucco pipeline and other southern corridor routes. European energy demand for gas is growing and Nabucco and others can make a significant contribution to European energy security.
Development of the oil and gas sector will drive the wider reconstruction of physical and human capital that Iraq needs. This is important for domestic stability. A combination of stability, economic development and the creation of a competitive private sector offer huge opportunities for international and Iraqi business. And it puts Iraq right back at the centre of the global economy it left 20 years ago.