Iraq’s Petroleum Sector Development- Opportunities & Challenges

1. Iraq’s Petroleum Sector Development- Opportunities & Challenges Presentation delivered before The 4th Iraqi Petroleum Conference Iraq: Exploration, Field Development & Operation ChallengesOrganized by Target Exploration 13 &14 September 2012, The Imperial College, London, UK By Ahmed MousaJiyad Iraq/ Development Consultancy and Research Norway Phone: +46 5659 5699 Email: mou-jiya@online.no

2. The Issues

3. 1- Augments Petroleum Proven Reserves Current Proven Reserves: 143 bbl; 66 oilfields;

4. Enhance The Recovery Factor Deep Drilling The 4th/5th Bid Rounds MoO Exploration program

5. 2- Enhance Production Capacities

8. PROVEN RESERVES, TOTAL & INCREMENTAL PRODUCTION CAPACITY 1.7 mbd-CPC 14 Oilfields 67.3 bbls(58.5%) 11.7 mbd-TPC MoO plan (mbd): 2011 – 2.752012 – 3.32013 – 4.52014 – 6.5 10.0 mbd-IPC

9. Gas Reserves & Availability Proven gas reserves:112tcf- trillion cubic feet, 71% associated gas, 20% non-associated and 9% dome gas. Geographically: 30% in the north and 70% in the south/middle Iraq. Probablereserves are estimated to be 275-300tcf. Associated Gas: 1mbd oil gives 0.800Bcfd- A 12.5 mbd oil gives 10.0 Bcfd Gas Flaring: currently Iraq is producing 1.5 bcfd, of which some 700 mcfd flares. Gas Fields Bid Round: Akkas, Mansuriya and Siba. Total 7.4 tcf proven Reserves. Production capacity of 820 mcfd; PPPs: 9-13;P/R ratio:~25 years.

10. N/IOCs Consortium (75%) St/Pr (25%) CP- mbd (BLP) PPTs- mbd/ Y R F $/b) S.B $m IPT- FCP 000bd Reserve billion barrels MEO $m IR $bln Oilfield AlAhdad CNPC (100) SOMO 0.000 0.115a/*Y 6 3 * 1.00c 350 1.6 Rumaila (N&S) BP (50.666), CNPC (49.333) SOMO 1.066e 2.850/ 7Y 2 500b 10% BLP 17.8 300 15-20 West Qurna1 Exxon Mobil (80), Shell (20) OEC 0.300 0.244f 2.350/ 2.850 7Y 1.9 2.0 100 10% BLP 8.6 200 40-50 Zubair Eni (43.747), Oxy (31.253), Kogas (25) MOC 0.200 0.183f 1.200/ 7Y 2 100 10% BLP 4.1 200 35 Missan (3 oilfields) CNOOC (85) TAPO (15) IDC 0.100 0.450/ *Y 2.30 300b 10% BLP 2.5 200 * West Qurna2 Lukoil (75), Statoil (25) NOC 0.000 1.800/ 13Y 1.15 150 120 12.876 250 30 Majnoon Shell (60), Petronas (40) MOC 0.045d 1.800/ 10Y 1.39 150 175 12.580 300 * Halfaya CNPC (50), Total (25) Petronas (25), SOC 0.003 0.535/ 13Y 1.40 150 70 4.098 200 * Garraf Petronas (60), Japex (40) SOC 0.000 0.230/ 13Y 1.49 100 35 0.863 150 7-8 Badra Gazprom (40), Kogas (30), Petronas (20) TPAO (10), OEC 0.000 0.170/ 7Y 5.50 100 15 0.109 1.203g 100 3.52 Qaiyara Sonangol (100) SOC 0.000 0.120/9Y 5.00 100 30 0.807 150 2.0 Najma Sonangol (100) IDC 0.000 0.110/9Y 6.00 100 20 0.858 100 * Total 1.698 11.730 -- 1853 ---- 67.285 2500 *

11. 3- Expand Export Capacities and Diversify Export Outlets MoO Plan 2011 – 2.42012 – 3.252013 – 5.092014 – 5.65 Export outlets (mbd) NAG: 8.5 (5SPMs, BoT & KoT) Syria: 4.5 (Rehab1.25; new 1.25 L/m crude; 1.5 Hc)+ gas pipeline Turkey: 1.6 (Upgrade K-C) + new oil and gas pipelines! Nabucco?? Jordan: 10,000 bd (Trucks) IIS gas pipeline? IPSA- oil pipelie? Zerga-Jordan? ICOEE

12. 4- Increase Gas Utilization & Reduce Gas Flaring MoO Plan Natural gas production capacity (mmcf/d): 2011 – 1,775 2012 – 2,375 2013 – 3,075 2014 – 4,500

13. 5-Developing Refining Capacity MoO Plan: Refining capacity (000bd-input) Four new major refineries Nassiriya (300,000 bd)- $8bn; Missan (150,000 bd)- $5bn Kirkuk (150,000 bd)-$5bn; Karbala (140,000 bd)-ca$5bn The legal frameworks are outlined in two laws: Investment Law (No. 13 of 2006) through NIC and the Refinery Investment Law (No. 64 of 2007). Contractual terms outlined in 17 January 2012 invitation offer from MoO, London Conf., May ??? In addition to these new capacities the ones to be renovated are Baiji, north of Baghdad, the Doura refinery in southern Baghdad and the Basra refinery in the south.

14. 6- FDI & IOCs Involvement • The State shall guarantee the reform of the Iraqi economy in accordance with modern economic principles to insure the full investment of its resources, diversification of its sources, and the encouragement and development of the private sector.§25 • The State shall guarantee the encouragement of investment in the various sectors, and this shall be regulated by law. §26. • Using the most advanced techniques of the market principles and encouraging investment to develop oil and gas wealth. §112 (2nd). The Constitutional Principles

15. Iraq’s Investment Requirements in the Petroleum Sector $200 billion • $100bn to develop upstream oil and gas fields; • $40bn to develop the gas industry; • $30bn to increase refinery capacity; • $30bn to expand export facilities.

16. 7-NES, NDP and Managing the Plenty National Energy Strategy NES is drafted by a committee composed of the ministries of Oil, Electricity, Planning, and Finance, DPM/E (HS) and PMAC (TG & others) . The World Bank financed the study and also assisting in its formulation . IEA-WEO 2012 "This strategy is going to provide the groundwork for which is the optimum scenario for Iraq to follow," "We are looking 20 years from now." (TG-PMAC)

17. HIPCU HRD HRD Honeymoon Risky LGDO HGDO Nightmare Delicate balance LRD LIPCU LRD

18. Where stands Iraqi today? Iraq-HIPCU FRD Honeymoon HGDO LGDO Iraq-LIPCU

19. Conceptual “Situation/ Strategy” MatrixProactive NOT Reactive

20. 8-Main Determinants Facing Iraq’s Petroleum Strategy 1- Legal: Constitution, FOGL, MoO, INOC, provincial law/KRG etc; 2- Institutional: who do what under what authority..,; 3- Human resources: de facto and de jure.., de-capacitating; management and coordination 4- Logistical (sector specific) and infrastructure; 5- Structural (Macroeconomics): Absorptive capacity limitations, Dutch disease and resource curse attacks; 6- Political (domestic); 7-Geopolitical / regional; 8- International; 9- Security; 10- Oilfields specifics;

21. Thank You