Iraq, with its vast oil and gas resources, has set itself some very ambitious production targets.
The government plans to increase gas production to 4.4 billion cubic feet per day (bcfd) and oil production to 5.5 million barrels per day (b/d) by 2030.
These targets, while realistic in terms of available resources, face significant hurdles, including limited infrastructure that is currently unable to support such an increase in production.
Current pipeline capacities and water injection facilities are largely insufficient to meet the country’s energy ambitions.
This situation places considerable constraints on operators, who have to deal with an undersized export network to maximize production potential. Infrastructure challenges are thus at the heart of the concerns for achieving these objectives.
Tax environment and interest from Asian investors
Alongside infrastructural limitations, Iraq faces an unattractive fiscal environment for foreign investment.
The stringent terms imposed by the government have historically held back exploration of new deposits, despite the existence of over 150 billion barrels of untapped resources.
Since 2013, only five exploratory drillings have been carried out in Iraq, a situation that illustrates investors’ timidity in the face of unattractive terms.
Nevertheless, the latest licensing rounds in 2024 show growing interest from Asian players, notably Chinese.
Attracted by opportunities in fields already discovered, these companies are increasingly positioning themselves as key players in Iraq’s energy landscape.
This shift from West to East in the origin of investors bears witness to an evolving dynamic in the sector.
Gas opportunities and future transformations
Beyond oil, Iraq is looking to exploit its gas potential by focusing on reducing flaring and decreasing its dependence on energy imports.
With gas reserves estimated at 100 trillion cubic feet (tcf), the country has significant leverage to attract investment.
Gas projects, in some cases more attractive than oil ones, are beginning to capture the attention of major energy companies, redefining investment priorities in Iraq.
This refocusing on gas, encouraged by abundant resources and a strong political will, could lead to a major transformation of Iraq’s energy sector.
The opportunities offered by this strategic shift are numerous, but their realization will largely depend on the country’s ability to reform its fiscal framework and strengthen its infrastructure, essential conditions for maintaining investor interest and ensuring sustainable growth.
