Iraq’s oil production is expected to increase by 860,000 bbl/d over the next four years from 4.46 million bbl/d in 2018 to 5.32 million bbl/d in 2022, according to Rystad Energy. With this, Iraq would fall short on its ambitious output target of 6.5 million bbl/d by 2022.

“Capacity constraints of production and export facilities, and postponements to the development plans and delays in awarding the Common Seawater Supply Project (CSSP) create restraints on Iraq’s output targets,” says Aditya Saraswat, Upstream Research Analyst at Rystad Energy. “The suspended negotiations between ExxonMobil and the Iraqi oil ministry over the multi-billion dollar Common Seawater Supply Project (CSSP) is only the latest example of major international oil companies struggling to develop business in Iraq,” he adds.

Nonetheless, the recently sanctioned developments in Iraq will bring 380,000 bbl/d to the country’s oil output tally, primarily driven by additional development at Halfaya and Majnoon fields. Production growth from the assets currently under development is driven primarily by additional phases of development at the Halfaya and Majnoon fields. The third phase at Halfaya, operated by PetroChina, will double the field’s overall output rising from about 200,000 bbl/d at present to about 400,000 bbl/d by 2022. At Majnoon, the field operator, Shell, relinquished its interests but the timeframe of the second phase of development remains intact. A $210 million deal with Halliburton to drill 30 wells, signed in January 2017, is likely to increase Majnoon production by about 120,000 bbl/d in the medium term from its current level of around 220,000 bbl/d.

Rystad Energy also forecasts an increase in output from fields that are already producing with a collective ramp-up of over 400,000 bbl/d. Output levels from giant fields already in production in Al-Basrah province – including Rumaila, Zubair and West Qurna 1 and 2 among others – are projected to grow by 320,000 bbl/d, constituting the lion's share of the ramp up volume. Other discoveries are expected to contribute about 70,000 bbl/d by 2022.

In the medium term, North Oil Company’s, Iraq’s state-run operator, efforts to reinstate production from Bai Hassan and Kirkuk Avana dome fields could mean a huge upside for country’s oil output. Once reinstated, the fields can increase the country’s oil production by 275,000 bbl/d. The recent efforts to feed the produced oil to domestic refineries and Kermanshah refinery in Iran are delayed due to logistic and security reasons. In the past, the majority of output from the fields was exported via the Kirkuk-Ceyhan pipeline. However, the pipeline is currently under Kurdistan Regional Government (KRG) control. The dispute between Baghdad and the KRG over federal budget allocations and control of oil revenues from the Kirkuk region has thus far prevented even an initial agreement from being reached on access to the pipeline.

“The agreement to feed domestic refineries in Kurdistan and export to Iran, while important steps towards fully restoring Kirkuk production levels, will provide collective outlets for no more than 110,000 bbl/d. In the near term, access to the KRG controlled Kirkuk-Ceyhan pipeline is therefore necessary in order for the fields to reach their pre-conflict production levels of 275,000 bbl/d,” says Aditya Saraswat.