Iraq Announces Plans for Large-Scale Expansion of Oil Production

Iraq has announced plans for a large-scale expansion of oil production in the south of the country. According to Abdul Jabbar, Director General of the Basra Oil Company (BOC), by 2020, the company intends to raise production to 6 million barrels per day.

BOC is a national Iraqi company responsible for oil in the south of Iraq. It is situated in Basra and is one of the major fundamental formations of the Iraq National Oil Company (INOC). It was the first nucleus and the basis of national direct investment projects in the 1970s, where the BOC was subsidiary to the national company.

At the moment, around 4.5 million barrels per day are produced throughout Iraq, with production opportunities limited to the Vienna OPEC + deal. However, the total capacity of Iraqi oil production does not exceed 4.8 million barrels, of which about 4 million barrels fall to the southern fields.

As such, within two years, BOC expects to increase production by 2 million barrels per day, though it is not clear just how the company is going to achieve such impressive growth. After all, two years ago, analysts of the banking holding Morgan Stanley predicted not an increase, but a gradual decline in production in Iraq.

In particular, according to the forecasts of expert Haizem Rasheed, the total Iraqi production in 2017 was to be 4.18 million barrels per day, in 2018 - 4.13 million barrels, and by 2020 to fall to 4.12 million barrels per day. Of course, the analysis of Morgan Stanley was based on the then crisis realities, and the production in the country today of more than 300 thousand barrels exceeds the long-term forecast of the bank.

However, in general, Morgan Stanley adequately assessed the production capacity of Iraq. Even before the beginning of the price crisis, when the country had enough investment and the budget did not go to war with the ISIS group (banned in the Russian Federation), the bank predicted that in 2020 the production in Iraq would be 4.6 million barrels per day.

If, then, analysts at Morgan Stanley did not see the prerequisites for an increase in production in the southern fields to 6 million barrels, why did BOC decide that it would be able to do so under the current conditions? After all, despite a slight increase in oil prices, investments in Iraqi extraction by no means flowed.

Dimitri Dolaberidze