Developing infrastructure crucial to sustain growing Iraqi economy and meet international demand for oil
- Iraq: Sunday, September 02 - 2012 at 16:15
- PRESS RELEASE
The Iraqi economy is highly dependant on the oil sector, and according to Dr. Ali Hussain, one of the Middle East's most respected independent oil consultants, developing the oil industry is a priority as it will ultimately bring economic sustainability.
Iraq has officially stated that its goal is to produce 12 million barrels per day (bpd) by 2017. Last year Iraqi oil exports generated $80bn. At present however, oil production is expected to hit 3.4 million bpd by the end of 2012, and if oil prices stay relatively high, the increased production may push the revenue generated from exports even higher.
"From an international perspective, there is an expected global increase in the demand for Iraqi oil due to the expected increase in the international demand for oil generated by the increase in oil consumption from countries like India and China," said Dr. Hussain.
According to forecasts by the US Energy Information Administration, India is expected to see an average of 3.5% annual growth in oil demand, outpacing China's 2.9% between 2008 and 2035.
Dr. Hussain further continued, "In order to support the Iraqi economy and Iraq's oil industry to fulfil Iraq's domestic and international goals, the economy, and in particular, the infrastructure must be developed. Iraq needs to invest in schools, hospitals, water, electricity, pipelines, terminals, communication, transportation and so on, in order to support its economy and the oil industry, and capitalise on the opportunities presented by its huge oil reserves."
"Once there is strong, modern, secure and reliable infrastructure, oil production will increase and the domestic economy will be boosted," he added.
The production of oil will significantly increase with strong infrastructural foundations and if oil prices remain high, more international oil companies will look to enter Iraq and capitalise on its huge oil and gas reserves.
International investment is not only crucial to boost the Iraqi economy, but presents lucrative opportunities for international investors too.
Dr. Hussain said, "Iraq's new international investment law encourages investment and offers incentives to international companies looking to enter the Iraqi market."
When the infrastructural foundations required to boost oil and gas production has been laid, agricultural and industrial development will follow. Iraq can then further proceed to look at opportunities in the tourism sector that consist of the numerous religious, historical and archaeological sites to further develop its economy.
Dr. Hussain then proceeded to state that it was undesirable for Iraq to continue with a small petrochemical industry with such huge oil and gas reserves. The country should work on developing its petrochemical capacity to satisfy both domestic demand and exports too, adding value to the Iraqi oil and gas resources.
Currently, there are three major Iraqi oil refineries - Baiji, Doura refinery in Baghdad and the Basra refinery. The total capacity of these refineries is approximately 720,000 barrels per day (bpd), however, at present the refineries are working under capacity producing an estimated 500,000 bpd.
Iraq is now planning to build five new refineries with a total capacity of 840 Mbbl.
Dr. Hussain said, "These refineries are being planned purely to satisfy domestic demand. However, I believe there is a need to build a further refinery with the sole purpose of exporting oil products. This would need to be a large facility with a capacity of at least 500 million barrels (MMbbl), and if located in Basra near the Gulf, the refinery would be in a prime location to export its products."
With the development of its economy through the development of its oil and gas industries, Iraq will quickly become a key player in the international oil market and the Iraqi economy and market will certainly offer long term and limitless opportunities to international companies looking to invest in Iraq.
Dr. Hussain is confirmed to participate at the Iraq Future Energy 2012 conference. Organised by The Energy Exchange and held in Istanbul Turkey from 17 - 20 September 2012 Dr. Hussain will present an overview of the current energy sector and Iraq's vision to deliver the desired increase in oil production.
Iraq Future Energy 2012 will provide attendees with exclusive insight on the projects that are awarded each year with candid and solution-led discussions on infrastructure, logistical and security issues along with the latest financial scenarios and regulatory frameworks that impact business in Iraq.
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