Iraq stands to gain almost $5 trillion in revenue from oil exports over the period to 2035, an annual average of $200 billion, and an opportunity to transform the country’s prospects.
Iraq makes the largest contribution by far to global oil supply growth. Iraq’s ambition to expand output after decades of conflict and instability is not limited by the size of its resources or by the costs of producing them, but will require co-ordinated progress all along the energy supply chain, clarity on how Iraq plans to derive long-term value from its hydrocarbon wealth and successful consolidation of a domestic consensus on oil policy. In our projections, oil output in Iraq exceeds 6 mb/d in 2020 and rises to more than 8 mb/d in 2035. Iraq becomes a key supplier to fast-growing Asian markets, mainly China, and the second-largest global exporter by the 2030s, overtaking Russia. Without this supply growth from Iraq, oil markets would be set for difficult times, characterised by prices that are almost $15/barrel higher than the level in the New Policies Scenario by 2035. Iraq stands to gain almost $5 trillion in revenue from oil exports over the period to 2035, an annual average of $200 billion, and an opportunity to transform the country’s prospects. The energy sector competes with a host of other spending needs in Iraq, but one urgent priority is to catch up and keep pace with rising electricity demand: if planned new capacity is delivered on time, grid-based electricity generation will be sufficient to meet peak demand by around 2015. Gathering and processing associated gas – much of which is currently flared – and developing non-associated gas offers the promise of a more efficient gas-fuelled power sector and, once domestic demand is satisfied, of gas exports. Translating oil export receipts into greater prosperity will require strengthened institutions, both to ensure efficient, transparent management of revenues and spending, and to set the course necessary to encourage more diverse economic activity.