Iraq is navigating a difficult path with its national oil policy, caught between OPEC+ production quotas and its ambitious plans to boost output capacity.
While the country’s oil production is set to increase by just 200,000 barrels per day (bpd) in the next two years under the new OPEC+ agreement, Iraq aims to expand its oil capacity by nearly 2 million bpd during the same period.
The new deal, reached this month, will gradually raise Iraq’s crude production from 4 million bpd to 4.1 million bpd by the end of 2025, and to nearly 4.2 million bpd by the end of 2026.
Nabil Al-Marsoumi, an economics and energy professor at Basra University, expressed concern that this modest increase in Iraq’s OPEC+ quota could hinder its plans to expand oil production capacity.
“The UAE has received an increase of about 300,000 bpd in its OPEC quota, while Saudi Arabia’s production will rise by 900,000 bpd. Iraq, with its massive oil reserves, should have pushed for a better quota,” said Al-Marsoumi. “Its goal to increase crude production capacity to over 6 million bpd by 2028 requires a more favorable agreement.”
Iraq, OPEC’s second-largest producer, has set a target to raise its crude oil output to 6 million bpd by 2028, according to a report by the state-run Iraqi News Agency (INA) in September, citing Basim Khudair, Iraq’s deputy minister for extraction affairs.
Al-Marsoumi further noted that Iraq’s oil policy lacks clarity, as evidenced by the country’s recent contracts with foreign companies to develop its oil and gas fields. These contracts, he explained, commit Iraq to paying damages to companies for oil production that might not be marketable due to OPEC+ output limits.
Earlier this month, British oil giant BP finalized terms with the Iraqi government to redevelop the Kirkuk oil and gas fields.
Al-Marsoumi proposed that Iraq might consider withdrawing from OPEC to freely increase its production to 5 million bpd by 2025, a move that could help address its budget deficit.
Another Iraqi energy expert, Walid Khaddouri, agreed that Iraq faces a series of difficult choices as it works to rebuild its oil sector, which was severely damaged by years of conflict.
“Iraq needs to decide whether it wants higher production, higher revenues, or both,” Khaddouri said. “If Iraq exceeds its OPEC+ quota, it risks upsetting other major members, especially Saudi Arabia. It’s a tough decision between boosting oil output or generating more cash.”
Khaddouri also highlighted that Iraq faces significant penalties if it fails to honor contracts with global oil firms, particularly if these companies make major oil discoveries.
In early 2024, Iraq awarded oil and gas concessions to 22 international companies as part of concession rounds 5+ and 6. Additionally, in October, the Iraqi Al Sabaah newspaper reported that the country plans to offer new oil and gas concession sites in 2025 as part of two new licensing rounds, “6+ and 7.”
Iraqi Oil Minister Hayan Abdel Ghani stated in September that these new projects will add almost 3.459 billion cubic feet of gas per day and increase Iraq’s recoverable oil reserves from 145 billion barrels to 160 billion barrels.
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