Iraqi Oil Minister resigns as production targets cut

The resignation of Iraqi Oil Minister Abdul-Mahdi in March, just after Petroleum Review went to press, came at a tough time for upstream development in Iraq. Hit by low oil prices, political disputes and a prolonged conflict with the so-called Islamic State, the Iraqi Oil Ministry has revised its production targets from 9bn b/d to 6mn b/d by 2020.

According to GlobalData Analyst Ali Al-Killidar, current production is around 4.3mn b/d and is forecast closer to 5mn b/d by 2020, primarily due to budget cuts faced by consortia across Iraq. He explains: ‘Generally, revenues from Iraq’s southern fields, which account for 95% of the state’s budget, are not enough to cover all the state’s budgetary expenses and repay oil companies for their investments in the upstream sector.’ He continues: ‘In May 2015, BP agreed to cut its budget for the Rumaila field by $1bn from the initially planned $3.5bn, leaving production steady at the current rate of 1.4mn b/d. Although the 2016 budget for the field has not been reported, a similar cut in investment is expected, with the primary focus of the operator shifting to offset the natural decline, at 17%.’

However, as the Iraqi authorities have recently managed to retake oil fields from Islamic State with international support, there is the possibility of redevelopment to salvage fields (‘probably in the long-term’, says the analyst) which had lost 400,000b/d of production during the conflict.