Iraq’s role in global oil markets: an assessment
Over the past decade Iraq has doubled its production capacity to 5m b/d, propelling the country to the status of OPEC’s second largest producer. The launch of a new crude grade – Basra Heavy – in 2015 and the expansion of southern export infrastructure has allowed southern exports to ramp up (with seaborne liftings currently averaging just above 3.5m b/d). Competitive pricing by Iraq’s State Oil Marketing Organisation (SOMO) and new Asian refinery upgrading capacity has increased Iraq’s market share in key demand markets such as India. With further plans to increase production and exports out to 2030, this paper will provide a detailed assessment of the following:
- The current status of Iraq’s southern export infrastructure and midstream storage. From 2020 onward, Iraq’s production profile is set to get heavier as more oil comes from the Mishrif reservoir (24–28° API, 4 per cent sulphur), the paper will address the infrastructural challenges involved and the steps being taken to stabilise crude quality and introduce a new crude grade (Basra Medium);
- An assessment of Iraq’s long-term export capacity in the context of a shifting energy mix (growing role of gas) and downstream expansion;
- The role of shifting global crude trade flows as competition increases for Asian market share and the role played by Iraq’s SOMO (trading JVs and attempt to control secondary trading of Iraqi crudes);
- How Middle East NOCs are adjusting their business and trading models to remain competitive in Asia and SOMO’s ambition to transition from marketing to trading;
- Iraq’s future role in OPEC; and finally,
- The competitiveness of Iraqi crude grades in the context of global and regional crude balances and a shifting product demand barrel.