Iraq has the world’s third largest proven petroleum reserves and has historically been the second largest oil producing country in the world, after Saudi Arabia, with over 115 billion barrels of proven oil reserves. Iraq's true resource potential may be greater than expected, as deeper oil-bearing formations located mainly in the Western Desert region could yield additional resources, but have not been fully explored. According to the 2008 BP Statistical Energy Survey, Iraq had 2007 proved natural gas reserves of 3.17 trillion cubic metres, 1.78% of the world total. Oil terminals are situated at Mina al Bakr, Khawr al Amayah, and Al Faw and there are oil pipelines linking the coutry with Turkey and Syria.
Although the presence of oil has been known for thousands of years, the first formal steps to tapping the resource came with the establishment of the Turkish Petroleum Company in 1912. Both Shell and BP were early shareholders in the company. After the first world war the company became the Iraq Petroleum Company (IPC) with Shell, BP, CFP, Exxon and Mobil together holding 95% shareholding. The Iraqi government nationalised IPC in 1972..
The Kirkuk Field, holding about 16 Gb of oil in a large surface structure, was discovered in Kurdistan in 1927. Since then, more than fifty oilfields have been found, of which about half are giant fields, together holding some 90 Gb. Production to-date from all fields amounts to almost 30 Gb, leaving about 60 Gb for the future plus whatever new exploration might turn up. It seems very clear from the size distribution of the fields that the bulk of Iraq’s oil has already been found, with many of the smaller discoveries still awaiting development.
ASPO estimates that a total of 125 Gb of oil will have been discovered by 2010, with about another 10 Gb to come in after that. Some 30 Gb have been produced to-date. Production stands at about 2 Mb/d, the amount being uncertain because of smuggled exports through Turkey, Syria, Jordan and Iran. There is very little instantly available spare capacity. Under optimal, unconstrained operating conditions, it would be reasonable to expect production to rise to about 3 Mb/d by 2010, reaching a peak of 4.5 Mb/d around 2020. The US DOE is more optimistic about reserves and believes there is huge unexplored potential in the Western desert.
Production dropped from 3.5 million bbl / day before the 1990 war to 200,000 bbl /day immediately thereafter but crept up again to around 2.5 million bbl / day before the 2003 invasion. According to the 2008 BP Statistical Energy Survey, Iraq produced an average of 2144.6 thousand barrels of crude oil per day in 2007, 2.69% of the world total and a change of 7.2 % compared to 2006. According to the 2008 BP Statistical Energy Survey, Iraq had a 2007 refinery capacity of 674 thousand barrels a day.
The future of oilfield development contracts, mostly involving Russian oil companies, is uncertain.
