Over 80% of Iraq’s budget and GDP is made up of oil sales. After the first two biddings rounds for Iraqi petroleum fields were completed in 2009, there was wide speculation about just how much Iraq would be able to produce in the future. Iraq’s Oil Minister, Hussain al-Shahristani has been talking about Iraq having the capacity to produce up to 12 million barrels a day in 6 years. An adviser to Prime Minister Nouri al-Maliki, and a former oil minister himself, said that a more realistic amount would be 6 million barrels a day in output in 6-7 years. Those estimates were based upon the fact that international companies promised to boost Iraq’s capacity to 13.23 million barrels a day after the auctions. A recent business report from February 2009 thinks both of those predictions are way off. It forecast Iraqi production at only 3.1 million barrels a day by 2013, and 3.9 million by 2018. In 2009 the Oil Ministry was able to produce 2.02 million barrels a day, which was actually a decrease from the previous five years.
Continued growth in the oil industry is limited by aging infrastructure, inadequate facilities, and corruption. The port in Basra, which handles the vast majority of Iraq’s exports for example, is incapable of handling a larger flow of oil. The Oil Ministry is hoping that foreign companies will help with these problems, but there are still many questions about whether the Iraqi government has the will and the means to manage the situation. Corruption for instance, could get worse, and Baghdad still has an inefficient state-run economy. Whatever amount the government is able to produce will largely determine the economic future of the country.
BBC, “Iraq oil capacity ‘to reach 12m barrels per day,’” 12/12/09
Brock, Joe, “Firms overstate Iraq oil potential – govt adviser,” Reuters, 12/7/09
Companies and Markets, “Iraqi Crude Oil Production Is Forecast To Rise To 3.9mn B/d By The End Of 2018,” Official Wire, 2/8/10
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/10