Download - Iraq Energy Outlook Special Report
© OECD/IEA 2012
9 October, London
© OECD/IEA 2012
Iraq: the energy context
Oil & natural gas resources are immense & the costs of production are among the lowest in the world
Already the world’s 3rd largest oil exporter, with plans to expand oil & natural gas production rapidly
Natural gas is an under-utilised resource – more than half of the natural gas produced is flared
Catching up & keeping pace with rising demand for electricity is critical to national development
Energy infrastructure & institutions, while improving, continue to be a serious constraint:
Legacy of damage & poor maintenance
Lack of consensus on governance of the hydrocarbons sector
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Oil is the cornerstone of Iraq’s economy
GDP, share of oil export revenues, population in 2011
Twin challenges for Iraq are to increase its oil revenues & then to use them to support greater diversification of its economy
Iraq Kuwait Iran Saudi Arabia
GDP
72% 55%
Oil export revenues
52% 24%
31 million 3 million 75 million 28 million
$115 billion $177 billion
$482 billion $578 billion
Population
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Oil is poised for a major expansion
Iraq oil production
Production more than doubles by 2020 & reaches more than 8 mb/d by 2035, with Iraq becoming a major supplier to Asian markets, especially to China & India
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2
3
4
5
6
7
8
9
2012 2020 2035
mb/d North
Centre
South
Iraq oil exports
1
2
3
4
5
6
7
8
9
2012 2020 2035
mb/d Other
Asia
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What will determine the pace of growth?
Political consensus on oil governance & legal framework
Speed & coordination of investment along the supply chain
Avoiding bottlenecks in storage & transportation
Sufficient water to support oil production
Drilling rigs & expertise
Iraq’s long-term oil & natural gas development strategy
Our High Case of 9 mb/d by 2020 would equal the highest sustained growth in the history of the oil industry
International market conditions
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Iraq leads global oil production growth
Growth in oil production, 2011-2035
Iraq accounts for 45% of the growth in global production to 2035; by the 2030s it becomes the second-largest global oil exporter, overtaking Russia
Iraq 45%
Rest of OPEC 42%
Non-OPEC 12%
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Iraq takes its place on the global gas map
Growth in key natural gas producers, 2011-2035
Iraq can potentially provide a very cost-competitive gas supply by pipeline to neighbouring countries or to Europe and – via liquefied natural gas – to Asia
50 100 150 200 250
Algeria
Brazil
Iran
Qatar
Iraq
Turkmenistan
Australia
United States
Russia
China
bcm
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Gas moves from sideshow to centre stage
Iraq’s natural gas balance
Reductions in gas flaring & development of new gas fields will be needed to meet Iraq’s growing domestic needs & its export ambitions
20
40
60
80
100
2010 2015 2020 2025 2030 2035
bcm Production
Demand
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Catching up with power demand
Oil helps to eliminate the power deficit in 2015. But without a longer-term shift to gas-fired power, Iraq would forego more than $500 billion in oil export revenue
Iraq electricity generation
50
100
150
200
250
300
2010 2015 2020 2025 2030 2035
TWh Shortfall in generation
Hydro & other renewables
Natural gas
Oil
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A chance to transform Iraq’s prospects
Iraq annual oil and natural gas revenues
$5 trillion in cumulative export receipts is 10% of all revenues from global oil trade; Iraq’s GDP in 2035 rises to the level of Saudi Arabia today
50
100
150
200
250
300
350
2012 2020 2035
Billion dollars (2011)
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A step-change in energy investment
Iraq annual average requirement for energy investment
The overall investment bill of $530 billion is 10% of oil export revenues, but annual spending needs to increase quickly over the current decade
5
10
15
20
25
30
2011 2012-2020 2021-2035
Billion dollars (2011)
Electricity
Natural gas
Oil
© OECD/IEA 2012
Delay would come at a high price
If investment & oil production growth is delayed then global oil markets tighten, with prices $15 higher in 2035, & Iraq’s cumulative GDP would be $3 trillion lower
Iraq oil production profiles
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4
6
8
10
2000 2005 2010 2015 2020 2025 2030 2035
mb/d
Central Scenario
Delayed Case
© OECD/IEA 2012
Iraq’s transformation has global implications
With 45% of the anticipated growth in global production to 2035, Iraq is key to the long-term outlook for oil markets
Successful oil & gas development requires a shared vision for the sector & efforts to coordinate investment all along the supply chain
Delay would come at a high cost to Iraq and to international markets
Productive use of natural gas is critical to a healthy domestic balance
Oil export revenues can provide the foundations for a modern and prosperous Iraqi economy