KRI: Oil production can halve in five years
According to documents that were not previously disclosed, oil output in the Kurdistan Region of Iraq (KRI) is likely to fall dramatically by 2027, Reuters reported on Tuesday.
Oil production in the region "could almost halve by 2027 if there is no new exploration or major investment in the sector," Reuters cited government documents saying.
While investments can boost KRI's oil output to 580,000 barrels per day (bpd) in five year’s time, leaving 530,000 bpd available for export, lack of investment will bring exports down to 240,000 bpd as older wells become depleted.
The region’s oil output has reportedly already slipped from about 468,000 bpd in 2019 to 445,000 last year and 434,000 in the first quarter of 2022.
Karwan Gaznay, a deputy for the Patriotic Union of Kurdistan (PUK) and a member of the Energy, Natural Resources, Commerce and Industry Committee in the Kurdistan Region Parliament, said:
“We should be alarmed by it, but it will not be a real issue if we sort out our problems with the Iraqi government, then Kurdistan can develop new blocks and increase production. We have a lot of reservoirs.”
While the debt of Kurdistan Regional Government (KRG) currently stands at about $38 billion, oil exports account for 85% of the region’s budget, Gaznay said.
One of the reasons that make the much needed investments difficult is the discord between the Iraqi central authority and KRG. An Iraqi Federal Supreme Court ruling in February deemed the legal foundations of the oil and gas sector in the region to be unconstitutional, forcing some foreign firms to leave.
The final decision in an ongoing arbitration case dating back to 2014 between Turkey and Iraq about the oil export pipeline that runs between the two countries is crucial both for KRI and potential foreign investors.
Iraq claims in the case that Turkey has violated an agreement by giving the Kurdish region access to the pipeline without Baghdad’s approval.
Following the final hearing at the International Chamber of Commerce in Paris in July, a final decision is expected in a few months, according to Iraq’s oil ministry.
The KRI has proven oil reserves of less than 3 billion barrels, while Iraq’s overall proven reserves are more than 140 billion barrels.