Iraq possesses one of the world’s largest oil and gas reserves, ranking second in OPEC oil production. Its proven oil reserves amount to 148 billion barrels, valued at $10.6 trillion, while its natural gas reserves reach 132 trillion cubic feet, currently valued at $514 billion. Iraq’s oil exports in 2024 amounted to approximately $99 billion, reflecting the importance of this sector to the national economy.
An ambitious vision to increase production despite obstacles
The Iraqi government seeks to increase its oil production from the current 4 million barrels per day to 6 million barrels per day by 2029. To achieve this goal, the country is developing 29 projects in 12 Iraqi governorates.
Despite these ambitions, economic advisor and expert Adel Al-Dalfi asserted during his interview on the “Business with Lubna” program on Sky News Arabia that Iraq faces “significant obstacles” that prevent it from achieving these goals. He pointed out that the oil sector’s infrastructure is in dire need of modernization, particularly with regard to pipelines, export terminals, and storage facilities.
“There are fundamental challenges that hinder increased production, most notably the complex bureaucracy that impacts investment contracts, in addition to the security situation, which may constitute an obstacle to attracting foreign companies,” according to Al-Dalfi.
Al-Dalfi: Iraq’s oil sector infrastructure needs modernization.
Huge foreign investments in the energy sector
Despite these challenges, Iraq has attracted massive investments from international companies. France’s Total Energies has invested $27 billion in energy projects, while Britain’s BP has invested $25 billion. Major investments have also been made by Chinese companies, most notably Sinopec, CNOOC, and PetroChina. Iraq has also opened its doors to American companies, raising questions about its ability to achieve electricity self-sufficiency through these investments.
Al-Dalfi added, “Contracting with these companies is an important step, but it is not enough. We need radical reforms to ensure a safe and attractive investment climate, in addition to enacting more flexible legislation that enhances investor confidence.”
Transformations in Energy Policy: Towards Diversifying Energy Sources
In light of US sanctions on Iran, Iraq has moved to diversify its energy sources and reduce its dependence on imported Iranian gas. Al-Dalfi explains that Iraq possesses “huge gas fields, such as the Akkas field, with reserves estimated at 6.5 trillion cubic feet, and the Mansouriya field,” which provide it with significant opportunities to achieve gas self-sufficiency.
Iraq’s oil reserves are 148 billion barrels.
Iraq has also begun implementing renewable energy projects, including solar and wind power, along with electrical interconnections with neighboring countries. Al-Dalfi noted that the government has launched programs to support citizens in installing solar energy systems through soft loans.
Iraq reduces gas flaring and moves towards exports
Iraq is one of the largest flaring countries of associated gas, flaring approximately 18 trillion cubic feet annually until 2023, causing economic losses and environmental pollution. However, under recent reforms, Iraq has managed to reduce its gas flaring rate to 67% and aims to reach 80% by the end of 2024, with the goal of becoming a net gas exporter by 2027.
A treasure in Iraq worth trillions of dollars
“If all goes as planned, Iraq will be able to export gas, strengthening its economic position and supporting energy stability in the region,” according to Al-Dalfi.
Iraq’s Economic Future: Promising Opportunities or Continuing Challenges?
With these transformations, Iraq’s economic future looks promising. However, the success of these plans depends on the government’s ability to remove investment barriers, enhance security stability, and implement structural reforms in the energy sector. The question remains: Will Iraq be able to achieve its economic renaissance, or will challenges remain obstacles to its ambitions?
