20120930-IEA-WEO-2012_Special_Report_Iraq_Energy_Outlook_142页_6mb

Iraq Energy Outlook Summary

Introduction

Iraq is the world's third-largest oil exporter with vast untapped resources and intentions to increase production significantly. While political stability and investment challenges hinder realization, successful development can generate trillions in revenue, driving economic growth and diversification. The International Energy Agency's special report assesses Iraq's energy prospects, examining the Central Scenario (moderate growth), High Case (rapid production increase), and Delayed Case (slow progress) out to 2035.

Key Points

• Oil: Iraq has the fifth-largest proven oil reserves globally. Production is projected to triple in the Central Scenario by 2035 (8.3 mb/d), driven by southern fields, requiring massive investment and addressing water needs for injection.
• Gas: Natural gas plays a vital role. In the Central Scenario, production doubles by 2035 (80 bcm), supporting power generation and potentially enabling exports.
• Electricity: A reliable grid is crucial for development. Grid electricity generation is expected to catch up with demand around 2015. Transitioning to gas-fired power improves efficiency, reducing oil use for generation.
• Investment: Cumulative energy sector investment to 2035 is over $530 billion (Central Scenario). Investment intensity is highest in the current decade, averaging ~$25-$28 billion/year.
• Economy: Sustained oil growth could add ~$5 trillion in export revenues (Central Scenario). Successful management is key to a diversified economy beyond hydrocarbons.
• Global Impact: Iraq's production growth will significantly influence world oil markets, potentially making it the second-largest exporter. Gas exports can offer new revenue streams.
• Challenges: Key obstacles include political stability, institutional reform, clear governance structures (federal vs. KRG), security, logistics, and human capacity.

Detailed Sections

1. Iraq Today: Energy and the Economy

• Resource Base: Holds major hydrocarbon reserves (5th largest oil reserves globally). Iraq's Iraq(toe) is low compared to global standards (1.3 toe per GDP unit).
• Current State: Oil dominates revenues (~95% of government income), electricity supply is unreliable (avg. 58% met demand in 2011), refining capacity is limited, and power generation is largely oil-based and inefficient.
• Structure: Federal vs. KRG governance differences create complexities. Authority for hydrocarbon exports is constitutionally in dispute. Exploration and development activities are ongoing.
• Data: Improving but remains an issue for policy analysis.

2. Iraq Oil and Gas Resources and Supply Potential

• Reserves: Proven reserves reached ~143 billion barrels in 2010, the 5th largest globally. USGS estimates ultimately recoverable resources at ~232 billion barrels.
• Production: Technical service contracts imply massive production increases (up to ~14 mb/d by 2020). Gas processing is needed to reduce flaring; associated gas volumes alone may be insufficient to meet future domestic needs without developing non-associated gas.
• Water Requirements: The Common Seawater Supply Facility (CSSF) is vital for southern oil fields. Delays and funding issues risk oil output shortfalls.
• Investment: Required investments peak in the early 2020s. Institutional capacity and project lead times must improve.

3. Iraq: Fuelling Future Reconstruction and Growth

• Demand: High economic growth and population growth drive strong energy demand increases (total demand quadruples to ~160 Mtoe by 2035).
• Power Sector: Critical for development. Grid electricity generation capacity needs to nearly quadruple (to >80 GW by 2035). Generation shifts from oil to gas. Gas demand explodes due to power use.
• Subsidies: High oil product and electricity subsidies (cumulative ~$214 billion through 2035 if phased partially) must eventually be addressed.
• Key Sectors: Transport: Car ownership increases; efficient vehicles and public transport needed.
  • Industry: Requires modernization and foreign investment.
  • Buildings: Improved efficiency standards and appliance quality crucial.

4. Implications of Iraq's Energy Development

• Transformative Potential: Revenue generation could be unprecedented, enabling massive recovery and diversification. However, 'resource curse' risks are real.
• Global Role: Major force in oil supply growth (second-largest growth contributor globally). By 2035, Iraq could be the second-largest global oil exporter after Saudi Arabia.
• Gas Exports: Potential exists to become a significant regional and global gas supplier.
• Trade-offs: Decisions on gas use (domestic vs. export) require clear strategy. Export route development is ongoing.

Annex A & B

• Provides definitions of units, conversion factors, and detailed reference sources used throughout the report.

*Note: This summary focuses on conciseness and captures the main findings, challenges, and implications as presented in the document.*