The US and Iran seem to have stepped back from the brink of armed conflict, at least for now, but many oil and gas companies nevertheless face serious decisions regarding their short and mid-term plans in neighboring Iraq, where tensions remain high.
There are still some 5000 American troops stationed in Iraq, but their continued presence there has become uncertain.
Iraqi oil production averaged more than 4.8 million barrels per day (bpd) in 2019, of which about 1.8 million bpd stemmed from the country's domestic and state-owned players. International oil companies were thus responsible for the lion's share of production - in the region of 3 million bpd. Companies headquartered in China collectively produced more than 1 million bpd, E&Ps from the United Kingdom produced beyond 630,000 bpd, and Russian players had combined average output of around 330,000 bpd. PetroChina and BP had the largest working interest production for overseas companies, at 880,000 and 606,000 bpd, respectively. US-based companies collectively produced about 180,000 bpd on average last year, led by ExxonMobil with nearly 106,000 bpd.
'ExxonMobil spent more than $250 million last year on its Iraqi upstream operations, and we have projected that this number would likely be ramped up by an additional $150 million over the next five years as the company aims to increase production through 2024. However, any spending plans in Iraq are likely to be under review given the current circumstances,' says Matthew Fitzsimmons, VP Oilfield Research at Rystad Energy. He reasons that ExxonMobil could ultimately decide to divert a portion of its Iraqi spending budget to other regions where the company is investing heavily in production growth, such as Guyana's offshore sector and the US shale industry.
Among the major oil companies in Iraq, BP has emerged as a clear leader. Before the recent flaring of tensions, BP had been expected to allocate about 4% of its annual $25.6 billion global oil and gas spending budget towards projects in Iraq. The company has managed an ambitious water injection program that is helping to boost its output and make BP the third largest producer in Iraq, but the fate of this program is now uncertain.
After spending nearly $1 billion in 2019 on its Rumaila North and South project, BP was expected to raise its capex to $1.2 billion by 2024. This would have seen BP's onshore Iraqi oil production eclipse 725,000 bpd by 2024. 'Putting this into context, that tally would be about 70,000 bpd higher than BP is poised to produce from the US shale sector in 2024, and Iraq would emerge as the company's largest production of one energy resource type in a single country. Only by combining offshore, onshore and shale in the US, could BP's working interest production in there outweigh its expected interests in Iraq,' states Fitzsimmons.
Contact:
Matthew Fitzsimmons
Tel: +47 24 00 42 00
Email: matthew.fitzsimmons@rystadenergy.com
About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy's headquarters are located in Oslo, Norway with offices in London, New York, Houston, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.
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