By Ahmed Mousa Jiyad.
Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.
Iraq’s Petroleum Upstream Development
and the Challenges of Managing the Plenty
Extended Abstract based on PowerPoint presentation delivered before the Natural Resource Charter -NRC Annual Conference “Investing Natural Resource Wealth for Sustainable Prosperity” hosted by the Arab Fund for Economic and Social Development-AFSED, held in Kuwait on 6-7 May 2013.
Acknowledgement: I am thankful to Professor Paul Collier, Blavatnik School of Government, University of Oxford, Member of NRC Technical Advisory Group and to Mr Abdulatif Al-Hamad, Chairman, AFESD, Member of NRC Oversight Board for their kind joint invitation, and to their competent staff for profoundly helping with the logistics of my participation.
The contents of my presentation are my own responsibility as independent consultant and scholar and thus do not represent the views and positions of NRC, AFESD or any Iraqi entity.
Since November 2008 Iraq upstream petroleum sub-sector witnessed many serious, unprecedented but interrelated developments: A grand opening to foreign investment; formulation of a new hybrid basic model for long term service contracts; offer the most prized petroleum fields in a short period of time; concluding many contracts through four bid rounds, and more under consideration; formal willingness for transparency measures and compliance to known international standard (EITI); and finally the formulation and adoption of the first ever Integrated National Energy Strategy-INES (Slide nr.3).
The Iraqi case present serious management of the plenty in every aspects: massive development efforts; require massive capital investment; generating massive influx of revenues, some of which will be earmarked for massive payments to the IOCs for cost recovery and remuneration fees, while the rest would finance massive state annual budgets; thus generating massive consequences on main macroeconomics parameters and sustainable development in the country.
Successful or otherwise the Iraqi case would have serious ramifications for the political economy of relationships between host governments and IOCs, and thus entails constant monitoring and professional objective and independent analysis.
Contractually, the concluded deals would uplift oil production capacity to an unprecedented level at unusual short pace. However, professional debate and different studies appeared to have impacted the official view to endorse lower, more feasible and realistic targets. This is expressed by three options comprising deferent plateau targets and time horizons that were considered by the recently finalised Integrated National Energy Strategy (INES).