Today the Kurdistan region, where more lucrative production sharing contracts are on offer and where the regulatory environment is more settled, is leading the way in the upstream sector. Details on all 53 production sharing agreements in the Kurdistan region are featured in full in the report.
Despite a coalition government and a political environment often characterized by infighting, the report also found that the Iraqi government remains committed to proceeding with development in the energy sector and is taking the necessary steps to sustain and encourage investment.
The security situation is also assessed, with the report finding that the security services’ capabilities have increased significantly, although the country’s energy infrastructure continues to be targeted. Despite the best efforts of Iraqi security services, including their dedicated oil police, protecting all facilities is a practical impossibility, the report stresses.
“There are few locations on a global scale that can offer the size and quality of hydrocarbon reserves as Iraq”, says Dr Phil Goddard, Director of Consultancy and the main author of the report.
He continues: “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.”
“We look forward to seeing continued progress towards a more settled regulatory environment, more favorable contractual terms for outside investors and a successful fourth licensing round”, he concludes.
In addition to a comprehensive overview of the Iraqi energy sector, the report also provides practical advice on doing business in Iraq as well as four central elements to a successful business strategy in the country. Other key highlights of the report include:
In the midstream sector, the report finds that, despite extensive hydrocarbon reserves, Iraq still lacks the infrastructure to access international markets with the pipeline infrastructure fragmented. The report also found the country’s oil storage capabilities to be critically low with capabilities to cover only four days’ worth of southern output. Plans to double the region’s capacity, however, are underway and further expansion is set to continue throughout 2012.