Electricity Shortage "Costs Iraq $40bn a Year"

The collapse of oil prices at the end of the last decade was a matter of concern for state officials who feared a huge deficit in the general budget. This would cut the amount of funds placed at their disposal without supervision or accountability. Therefore, more pressure was exerted on oil authorities to increase production so as to compensate for any potential budget deficit. It is in light of these facts that agreements were concluded with international oil companies to develop Iraq's oil fields.

This is not a criticism of cooperation with international companies, since with the collapse of state institutions and the emigration of large numbers of Iraqi oil industry experts, such cooperation became necessary. The Iraqi National Oil Company, however, should have had an active role in monitoring the execution of contracts by international companies, according to what is agreed upon, thus providing an opportunity to train a new generation of Iraqi specialists. The problem lies in the specific objectives, namely production increase from 2 million to 3 million barrels per day to 12.5 million barrels per day within a period of less than a decade, in a country lacking political stability and on the brink of civil war.

Finally, producing 12.5 million barrels per day within a short period of time means that markets will be flooded with oil supplies, leading to intense competition with other OPEC and non-OPEC producers. This would force discounts and lead to a decrease in revenues. This means the country would receive an oil income of far less than expected, which contradicts the main objective of the oil policy.

[Picture: Mosul Dam]