The difference between this aggregate and any scenario of 6 mbd or 9 mbd is very significant and surely could have many real implications that have to be addressed seriously and thoroughly by the Ministry of Oil and related Iraqi authorities and, accordingly, should be seen as a matter of urgency and priority.
The following implications worth highlighting for further deliberations by the Ministry of Oil and related higher and other authorities:
- There surely is a need to revise and renegotiate the concluded contracts, especially those for bid rounds one and two. Accordingly Iraq has to prepare its renegotiation strategy and form the negotiating team carefully and properly. This is particularly critical since according to the signed contracts of bid round one the Final Development Plans for the involved oilfields have to be in place within the first half of 2013;
- Due to lower production levels and longer plateau period comparing with the contracted ones, there are no compelling reasons to hold further bid rounds, especially for oil-prone exploration blocks, for a considerable period of time but at least until 2020 – the commencement of the new plateau target period. The ministry should instead focus its efforts and energies to ensure proper implementation of the already concluded (and would be renegotiated) service contracts to avoid the possibility of the ‘delayed’ case foreseen by IEA.
- Under either scenario of 6 mbd or 9 mbd in 2020 the magnitudes of the cash flows are tremendous. The IEA Report envisages, up to 2035, a required investment of $400 billion under the Central case and $580 billion under the high case. The expected revenues, up to 2035, are $5 trillion under the Central case and much more than that in the high case scenario.