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Iraq Oil Overview & Update

Luay J. Al Khatteeb Executive Director

Iraq Energy Institute

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OPEC Estimate: World Supply & Demand

mb/d 2015 2020 2035 OECD 46.0 45.2 41.9 DCs 41.2 46.6 61.2 Transition economies 4.9 5.2 5.7 World 92.2 97.0 108.8

• Close to 80% of demand increase is from developing Asia & non-OECD. • Over medium-term OECD demand is flat, and longer term declines significantly. • Longer term patterns increasingly affected by efficiency patterns, as well as

demographic and economic slowdown.

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Kuwait

Iran

Jordan

Syria

KSA

Turkey

The Size of the Prize

Oil: Reserves ~, PPT ~, Prod.

MoO ~ 143bn/bbl , ~ 13.5mb/day

Current Prod.: 3.1mbpd

MNR 50bn/bbl ~, ~ 1mb/day

Current Prod.: 200kbpd

Gas: Reserves ~, PPT ~, Prod.

MoO ~ 127tcf , ~ 9bcf/day

Current Prod.: 2bcf/day

MNR ~ 100tcf , ~ 1.5bcf/day

Current Prod.: 350mscf/day

Reconstruction 1.3 Trillion USD

50% on Energy Sector

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Year Month

Basra Oil Kirkuk Oil TOTAL Ave $

QTY

M/B

Val

M/USD

QTY

M/B

Val

M/USD

QTY

M/B

Val

M/USD

(US $ /

BBL)

2012

Jul 68.7 6691 9.3 886 78 7577 97.141

Aug 69.8 7414 9.7 1031 79.5 8445 106.226

Sep 65.2 7.006 12.6 1.365 77.8 8.371 107.596

Oct 67.3 7103 14 1475 81.3 8578 105.51

Nov 65.8 6866 12.8 1334 78.6 8.2 104.326

Dec 62.7 6495 10.1 1056 72.8 7.551 103.723

2013

Jan 64.9 6.802 8.2 870 73.1 7.672 104.923

Feb 61.5 6,596 9.5 1,048 71 7,644 107.662

Mar 65.1 6,764 9.8 1,008 74.9 7,772 103.765

Apr 69.5 6,879 9.2 885 78.7 7,764 98.701

Rev

enu

es f

rom

Oil

Exp

ort

s

M

ain

fee

der

to

Fed

era

l Bu

dg

et

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Petroleum Legal Framework

Hydrocarbons Law

Hydrocarbon Management

INOC Law

Regulated / Operator

MoO Reform Law

Regulator / Policy

Revenue Sharing Law

Revenue Distribution Monitoring Commission

Future Fund

Hydrocarbons Revenue Sharing

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Bid Rounds, Fields, and Companies

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Short-term (1-3 years)

Medium-term (3-7 years)

Long-term (7+ years)

Banking

Maintenance

Power & water

Drilling rigs

Kurdistan exports

Security

Personnel

Ports & roads

INOC capacity

People, Politics, HSE

Water injection

Domestic refining

Gas handling

Export infrastructure

New facilities

OPEC quotas

Reservoir performance

The 7 Year Plan

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2009: IEA vs. GoI Estimate: Oil Production Profile

Source: Ministry of Oil, GoI (Government of Iraq, 11/08/2010)

Bid Plateau PPT (MoO) BP/PPT (%)

Round 1 3.025 226 %

Round 2 4.765 2.210 216 %

Total 11.590 5.235 221 %

6.825

Bid Plateau vs. MoO Plateau (millions of bbl)

MoO Review in 2012 of Oil Production per day

2013: 3.78mb 2014: 4.43mb 2015: 4.80mb 2016: 6.05mb 2017: 7.20mb 2018: 9.04mb 2019: 9.12mb 2020: 9.10mb

to

2030: 9.0mb

Source: Ministry of Oil

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Crude Oil Export Pipeline (Present)

Northern Lines Capacity: 1.6mbpd Actual: 500kbpd

Southern Lines Current: 1.65mbpd

SPMs (Capacity: 4.5mbpd) Capacity 900kbpd/SPM

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Current Oil Pipeline Infrastructure (Present)

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National Energy Strategy on Crude Oil (2)

A flexible crude evacuation system will enable Iraq to diversify markets and optimize netbacks

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Iraq Jordan Pipeline

Source: SNC

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Source: Ministry of Oil

Iraq Oil Storage Projects

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National Energy Strategy on Crude Oil (1)

As heavier reserves are tapped, crude should be segregated into new grades with different

allocation priorities

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Crude Categorization Based on 9.1mbpd

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Ministry of Electricity vision on Gas & Power (2011) Ministry of Electricity Power Master Plan (not including Kurdistan) - Parsons Brinckerhoff

Analysis by:

Iraq Energy

Institute (IEI)

Oil

Production

MMBBL/D

Dry Gas

Production

Bcf/d

Total

Power

Generation

GW

Power Generated

using Dry Gas

In GW

Dry Gas

Volumes for

Power Gen

Bcf/d

Industry &

Oil Installations Dry

Gas Requirements

Bcf/d

Total Local

Dry Gas

Demand

Bcf/d

Surplus Dry

Gas Bcf/d

Scenario 2015 4.5 4 18 8.5 2.2 1 3.2 0.8

Scenario 2020 7 6.3 23 16.5 4.2 1.3 5.5 0.8

Scenario 2030 10 9 37 32 8 1.5 9.5 -0.5

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Fuel Mix: Iraq MoO Plan for Fuel Supply to Power Stations 2011-2020

Dry Gas supply to power stations MMscf/day Crude Oil supply to power stations k/bbls/day

Fuel Oil supply to power stations M3/day Gas Oil supply to power stations M3/day

Data Source: Iraq Energy Institute compilation from MoO Data, Planning Department

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Refineries

New Refinery

Existing Refinery

MOSUL

KIRKUK

BAIJI

DURA

KERBALA

NASIRIYAH

MAYSAN

BASRA

MoO Estimate Plan Year Refining Capacity

2011 575 kbpd 2012 640 kbpd 2013 680 kbpd 2014 700 kbpd

2020 >1500 kbpd

Downstream law 64 of 2007, and 2nd Amendment in 2011. Incentives offered to private investors: Supply of crude by the government at the average export price minus 5%, provided that the discount shall not be less than $ 4 and shall not exceed $ 8, for a period of 50 years.

East BAGHDAD

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In Conclusion & The Way Forward

OPEC Quota Energy Supply & Demand

Volatile Region

Transit Countries

Infrastructure

Local Issues Policy, Politics, Security

The way Forward

•Regardless of all challenges, Iraq’s oil production will

continue to rise. A potential target of 6-to-7 million barrel

per day is achievable by 2020.

•Iraq is working on diversifying its export outlets, but the

southern corridor will continue to be the main channel

with a capacity of 6mbpd.

•Iraq’s refining capacity could reach 1.5mbpd subject to

successful review of the downstream laws to increase

profit margin for investors.

•The majority of Iraq’s oil will travel to Asia, and the Govt.

is working to downstream JVs / Partnerships with

Indonesia, China, India and South Korea.

•Politically, the most Important laws and establishments

are needed to define the New State of Federal Iraq. This is

including The Federal Court (Art.92), The Revenue

Sharing Commission (Art. 106) and the Federal Oil & Gas

Council (Art.112).

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Thank you for your attention

Twitter: @Al_Khatteeb e: luay@iraqenergy.org w: www.iraqenergy.org