weslin3 wrote:[You must be registered and logged in to see this link.]May 12, 2003
How Much Oil Does Iraq Have?
By: Gal Luft
[You must be registered and logged in to see this link.] [You must be registered and logged in to see this link.] Now that Iraq's oil has been secured by coalition forces and hopefully will soon be brought back on stream, it is time to solve a potentially important mystery: how much Iraqi oil is actually there?
Over the past several months, news organizations and experts have regularly cited Department of Energy (DOE) Energy Information Administration (EIA) f
igures claiming that the territory of Iraq contains over 112 billion barrels (bbl) of proven reserves—oil that has been definitively discovered and is expected to be economically producible. In addition, since Iraq is the least explored of the oil-rich countries, there have been numerous claims of huge undiscovered reserves there as well—oil thought to exist, and expected to become economically recoverable—to the tune of hundreds of billions of barrels. The respected
Petroleum Economist Magazineestimates that there may be as many as 200 bbl of oil in Iraq; the Federation of American Scientists estimates 215 bbl; a study by the Council on Foreign Relations and the James A. Baker III Institute at Rice University claimed that Iraq has 220 bbl of undiscovered oil; and another study by the Center for Global Energy Studies and Petrolog & Associates offered an even more optimistic estimate of 300 bbl—a number that would give Iraq reserves greater even than those of Saudi Arabia. In a
Guardianinterview before the war, Taha Hmud Moussa, Saddam's deputy oil minister, said that all of Iraq's oil reserves "will exceed 300bbl when all Iraq's regions are explored
If true, this would mean that Iraq has roughly a quarter of all of the world's oil. These assessments have been repeatedly cited in news articles, conferences, think tank briefings, congressional testimonies, and academic works because they raise the prospect that America's energy security could significantly improve if Iraq were able to challenge Saudi Arabia's position as the world's preeminent oil producer.
AN UNREPORTED DEBATEThere is no doubt that Iraq has a huge oil potential that still needs to be developed, and once opened for exploration, it could again be one of the world's most attractive oil domains for investors. But the reserve estimates that have so far been accepted uncritically by the public have been challenged by many petrogeologists and have yet to be substantiated. This is an important problem given the wide range of important decisions being made regarding Iraq's future and the global energy market.
It is particularly important to verify the estimates of Iraqi reserves since the DOE figures stand in contrast to those of an equally reputable U.S. government organization. In its 2000
World Petroleum Assessment, the Department of the Interior's U.S. Geological Survey (USGS) presented figures based on extensive geologic studies by a team of more than 40 geoscientists claiming that, as of the end of 1995, Iraq had 100 bbl of proven reserves, of which 22 bbl had already been recovered. Hence, according to the USGS, Iraq's current proven reserves amount to only 78 bbl—only two-thirds of the DOE's more commonly accepted 112 bbl estimate.
When it comes to assessing Iraq's undiscovered reserves, the differences between the DOE and the USGS becomes even starker. According to the USGS—which is hardly a Chicken Little when it comes to reserve predictions—there is a 95 percent probability that Iraq has at least 14 bbl, a 50 percent probability that it has at least 45 bbl, but only a 5 percent probability that it has 84 bbl of undiscovered reserves. This means that the probability that Iraq has 200 bbl or 300 bbl, as so many of the reports have suggested, is, according to USGS calculations, close to nil.
The discrepancies between the United States' two chief government agencies dealing with energy assessments are so sharp that they present entirely contradictory images of Iraq's oil potential. If the DOE data is right, then Iraq has the world's second largest proven reserves. On the other hand, if the USGS figures are right (and they are also endorsed by the 2002
Energy Outlook of the Paris-based International Energy Agency, whose projections are recognized as authoritative throughout the energy world), then Russia would be second, with roughly twice the reserves of Iraq.
TWO METHODS OF ASSESSMENTThe discrepancies between the DOE on the one hand and the USGS and IEA on the other stem from their different methods of assessment. USGS geologists prepare estimates for all nations, based on elaborate computer programs and a large body of statistics maintained by a private company, Petroconsultants, in Geneva. This information, assembled over 40 years from myriad sources, covers some 18,000 oil fields worldwide. The product is an estimate of the percentage probability of new discoveries in each petroleum system. Although this is generally the only way to assess the unknown, the method is not free of guesses, assumptions, and inaccuracies. That said, it is still far more accurate than the method the DOE has applied.
In truth, the DOE has no method of independent evaluation at all. Its main source of public data is the
Oil & Gas Journal (OGJ), a leading trade journal of the oil industry. Over the years, the
OGJ has become the most widely quoted source of reserve assessments. Its data is used by the much quoted annual
British Petroleum Statistical Review of World Energy and by the Organization of Petroleum Exporting Countries (OPEC). However, the reserve figures published annually by the
OGJ are hardly beyond reproach.
In fact, the
OGJ data is based on survey responses and updates released by the individual countries themselves, leaving them open to a slew of problems. First, in many cases, the countries themselves do not release new data every year, and some don't ever. But the
OGJ's policy is to alter a reserve figure "only when it receives not only evidence that a change is necessary but also a reliable new estimate." Many countries refuse to provide the
OGJ any information at all, and so their reserves are published unchanged year after year (even if they have been pumping full throttle the entire time). Half of the 67 countries listed in the 1995
OGJ report gave the identical oil reserve numbers as those for previous years—thereby omitting any production that would obviously have depleted the fields. Likewise, as many as 70 countries reported unchanged numbers in 1999, while in the 2002 report 67 out of 105 countries did not change oil values even though most of them produced at full capacity. Moreover, some countries provide misleading or outdated oil reserve data to try to gain political prestige and leverage in negotiations for OPEC production quotas or World Bank loans and grants. While this is widely suspected, from time to time hard proof surfaces. For example, last year Mexico suddenly changed its claims regarding its oil reserves from 26.9 bbl to only 12.6 bbl when Petroleos Mexicanos, Mexico's state oil monopoly, was forced to comply with U.S. Securities and Exchange Commission filing guidelines.
Since the
OGJ admits that it is not qualified to assess the validity of the information, its estimates should be taken with at least a grain of salt—which raises the question of why the DOE prefers to use data from a commercial publication rather than data derived in a more statistically and scientifically defensible manner by a fellow government agency.
IRAQ'S OIL RESERVESGiven Iraq's poor record of reporting on other issues of international concern, there is every reason to suspect that Saddam Hussein's regime was less than candid in its reports on oil reserve estimates—especially during the past 12 years, when Iraq's oil fields were inaccessible to reputable Western companies.
Even before the 1990-91 Gulf War, it was difficult to assess what still lay beneath the Iraqi sands. Most of the geological data about Iraq's reserves was gathered before the nationalization of the Iraq Petroleum Company in 1972. From then on, data on Iraq's oil reserves was closely guarded by Saddam's regime, which limited the ability of the international community to conduct an external audit. For the most part, Iraq's oil data has been marred with inconsistencies, gross approximations, and, at times, bold exaggerations. In 1987, for example, despite the fact that it was in the midst of war with Iran and its oil industry was mostly static, Iraq claimed to have more than doubled its reported reserves from 47 bbl to 100 bbl. The increase was a lie: it was just creative bookkeeping designed to increase Baghdad's OPEC quota rather than the result of new oil discoveries. Over the last six years, Iraq has claimed that its reserves have remained constant, despite the fact that it produced close to a billion barrels per year through the oil-for-food program and its various smuggling operations via Syria, Jordan, Turkey, and the Persian Gulf.
As for undiscovered reserves, external auditing is even more difficult and Iraq's claims are even more dubious. Issam al-Chalabi, Iraq's oil minister from 1987 to 1990, admitted in the March 24, 2003 issue of the
OGJ that Iraq's oil figures are "preliminary in nature since work was often interrupted by political problems, and the technology used is now outdated." Large parts of the country, especially in Iraq's Western Desert and its northwest, are still untapped and need to be explored. This is where the DOE and USGS really part company. According to the
[You must be registered and logged in to see this link.], deep oil-bearing formations located in the vast Western Desert region could possibly yield as much as 100 bbl. This again contrasts with the detailed data of the USGS, which suggests only a 50 percent possibility of 6.6 bbl in Iraq's Western Desert petroleum system. Even under its most optimistic scenario, the USGS predicts no more than 14 bbl coming from this area.
However, there are some facts that are undisputed. First, Iraq has considerable oil reserves and low production costs. Second, because of Iraq's isolation over the last decade—during which exploration technology has greatly improved—there has been almost no use of the most sophisticated exploration techniques such as seismological surveys, magnetometers, and sniffers in Iraq. Furthermore, most of the fields have not been explored down to the deepest layers of the ground, where plenty of oil can be found. Out of the 74 fields that have been discovered and evaluated, only 15 are actually operating. In addition, there are 526 prospective drilling sites in Iraq today, but just 125 of them have actually been drilled. Of those, 90 have shown potential as oil fields, but only 30 have been even partially developed. This means that once on the ground with sophisticated exploration tools, petrogeologists could establish in relatively short time a far more accurate picture of the scope of Iraq's reserve than the one we have today.
THE STRUGGLE FOR IRAQ'S OPEC QUOTASWhy is it important to know how much oil Iraq really has? Petroleum analysis is often a fuzzy business, and there is no guarantee that one analysis regarding Iraq's reserves is closer to the truth than another. But a comprehensive assessment of Iraq's oil and gas endowment is essential not only for Iraq's future, but also for the economic and strategic security of the United States and the world at large. Iraqi reserve estimates are the basis of economic planning and a decision-making tool for investors. At a time when billions of dollars of investment are heading toward Iraq, it is critical that investors base their investment decisions on sound economic data rather than figures provided by a regime notorious for its unreliability.
Iraq's oil figures will also be used in assessing the terms for loans and grants provided to the new government. These funds will be essential for the reconstruction effort, especially in the next several years, when the country's oil infrastructure will be overhauled. No less important, in the next few months Iraq will enter negotiations with OPEC to determine its production quota. In fact, an Iraqi delegation led by Jawdat al-Obeidi, the self-proclaimed deputy governor of postwar Baghdad, and comprising senior oil officials from Iraq's deposed government, took part in OPEC consultations in Vienna in April after the fall of Baghdad.
Since Iraq has been the subject of United Nations economic sanctions since 1990, its oil exports have been overseen by the Office of the Iraq Program, and it therefore has not participated in the OPEC quota system. As soon as Iraq reactivates its participation in OPEC, this will all change. OPEC quotas are determined by consensus and based on various factors like the condition of the country's oil infrastructure, its capacity to produce and transport, the degree of the government's dependence on oil revenues, demographic and economic considerations, and the demand for a specific country's oil. But one of the most important parameters in determining the quota is the overall size of reserves. With 261 bbl of reserves, Saudi Arabia's quota stands at 8 million barrels per day (mbd). Kuwait and the United Arab Emirates each have about 95 bbl of proven reserves and their production quota is therefore only
2 mbd. Many analysts believe that with a stable political situation, heavy investment, and a political environment conducive to economic development, Iraq might be able to pump up its production to as much as 6 mbd by 2010 and 7-8 mbd by 2020.
Despite OPEC's claim that each member country retains absolute sovereignty over its oil production, OPEC members agree by unanimous vote on production ceilings. It is no secret that Saudi Arabia is likely to be the main casualty if Iraq is able to boost its production to join the small club of giant producers—especially if Iraq is able to create spare production capacity to cut into Saudi Arabia's near monopoly. Before the Gulf War, Iraq's OPEC quota was 3.
2 mbd. If Iraq's reserves are proven to be in the range claimed by Saddam's regime, Iraq will be able to demand a much higher production quota from OPEC, rivaling that of Saudi Arabia—or perhaps even higher, since Iraq's population is larger. OPEC's current total production quota stands at 25.4 mbd. Assuming that OPEC chooses to keep this constant to maintain oil prices, then a gradual increase in Iraq's quota would have to come at the expense of fellow producers, who will have an incentive to try to limit Iraq's production.
It is unlikely that Saudi Arabia, which is heavily dependent on oil revenues and in serious financial straits, would agree to transfer a significant portion of its production quota to Iraq. Riyadh's reluctance might prompt Iraq to seriously consider leaving OPEC, because Iraq will have a tremendous need to pump as much oil as possible to pay for its recovery. Moreover, Washington might strongly encourage such an Iraqi move, since any competition with OPEC would likely increase oil supplies, thereby lowering prices.
However, if Iraq remains a member of OPEC, as seems more likely, the negotiations over its quotas are likely to take years and to be tied into the gradual increase in Iraq's production capacity. Iraq is unlikely to exceed its standing but dormant 3.
2 mbd OPEC production for roughly five years, pushing off the need for the kind of hard choices that will be required to deal with this thorny issue. As this process unfolds, it is essential to engage in a comprehensive evaluation of Iraq's oil endowment to put the record straight using fresh, reliable, and widely accepted information produced by scientific methodology, not the wishful thinking of a deceitful regime.
[You must be registered and logged in to see this link.]This was written in 2003.
Yesterday at 3:57 pm by Bama Diva
» It includes 4 stages.. The Ministry of Interior determines the impact of digital transformation on c
Yesterday at 2:24 pm by Rocky
» The Minister of Industry participates in the work of the 28th session of the General Assembly of the
Yesterday at 2:22 pm by Rocky
» Next Saturday... the Sudanese will be on a southern tour to open oil projects
Yesterday at 2:19 pm by Rocky
» An Iraqi minister withdraws from an international conference because of Israel
Yesterday at 2:14 pm by Rocky
» The judiciary responds regarding the activation of the Doctors Protection Law
Yesterday at 2:13 pm by Rocky
» utube 6/3/24 MM&C IQD Update-Iraq Dinar-Accelerate- Digital-Financial-Banking Reforms-Best Budget
Yesterday at 7:14 am by Rocky
» utube 6/4/24 MM&C IQD Update-Iraq Dinar-2024 Budget Passed-Gazzette-Timing-197 Companies Cease Dol
Yesterday at 7:13 am by Rocky
» utube 6/6/24 MM&C Iraq Dinar- IQD Update-Tripartite Budget-Economic Decision-D
Yesterday at 7:12 am by Rocky
» Demanding the government to reveal the details of its meeting with Kuwait and Saudi Arabia
Yesterday at 7:06 am by Rocky
» An economist reveals the positive side of the budget
Yesterday at 7:04 am by Rocky
» The Housing Fund launches new loans after an agreement with the Central Bank
Yesterday at 7:00 am by Rocky
» The President of the Republic: The relationship between the federal government and the regional gove
Yesterday at 6:54 am by Rocky
» Parliamentary Finance: The new salary scale is still under study
Yesterday at 6:52 am by Rocky
» The central bank sells more than $275 million at auction today
Yesterday at 6:50 am by Rocky
» Kurdish MP: The region’s share in the budget is fair and we are happy to see it passed
Yesterday at 6:47 am by Rocky
» Abdel Wahid: The region’s budget allocations do not fit its reality, and the smuggled funds are no l
Yesterday at 5:19 am by Rocky
» Al-Sudani: Understandings with France amounting to one billion euros to build industrial projects...
Yesterday at 5:16 am by Rocky
» FinTech in Iraq: How is Iraq reshaping its financial future?
Yesterday at 5:14 am by Rocky
» A new rise in dollar prices in Baghdad and Erbil
Yesterday at 5:12 am by Rocky
» The US State Department calls on the Iraqi government to hold accountable those responsible for targ
Yesterday at 5:11 am by Rocky
» The authorities in Kurdistan warn against immigration abroad by closing camps for displaced people i
Yesterday at 5:09 am by Rocky
» Oil announces an increase in the rate of electronic trading
Yesterday at 5:08 am by Rocky
» The Minister of Education opens a job fair with the participation of 40 institutions specialized in
Yesterday at 5:06 am by Rocky
» What are the rates of completion on the “Development Road”?... Al-Kaabi: We will develop new highway
Yesterday at 5:04 am by Rocky
» The oil export file prompts a Kurdish delegation to visit Baghdad next week
Yesterday at 5:03 am by Rocky
» Baghdad intends to transform its entrance controls into electronic smart ones
Yesterday at 5:01 am by Rocky
» It confirmed its commitment to money laundering standards.. The Iraqi National Bank: We do not deal
Yesterday at 5:00 am by Rocky
» America: Attacks on our companies harm Iraqi workers and capital
Yesterday at 4:59 am by Rocky
» Iraq announces a decrease in salinity in the marshes
Yesterday at 4:58 am by Rocky
» Economic warning from the Basra-Aqaba pipeline.. How much is its value?
Yesterday at 4:57 am by Rocky
» In exchange for money...thwarting attempts to sell ministerial questions in 3 Iraqi provinces
Yesterday at 4:56 am by Rocky
» Customs: We closed the exemption corruption and are pursuing violators
Yesterday at 4:54 am by Rocky
» A massive campaign to lift violations of electricity
Yesterday at 4:53 am by Rocky
» The Prime Minister sponsors an international agreement to finance the private sector
Yesterday at 4:52 am by Rocky
» Wait in the health professions law
Yesterday at 4:50 am by Rocky
» Construction of 3 dams in Kurdistan
Yesterday at 4:49 am by Rocky
» Parliament: We support the initiative to increase housing units
Yesterday at 4:48 am by Rocky
» The “National Contract” calls for accelerating the selection of the Speaker of Parliament
Yesterday at 4:47 am by Rocky
» Investment law in the balance of the economy
Yesterday at 4:44 am by Rocky
» Al-Rafidain: Digital transformation is proceeding according to set timings
Yesterday at 4:43 am by Rocky
» Head of the Customs Authority told {Al-Sabah}: We closed the exemption corruption and are prosecutin
Yesterday at 4:41 am by Rocky
» Al-Sudani: The scourge of corruption is no different from terrorism and must be fought
Yesterday at 4:39 am by Rocky
» Completing all sections and bridges on the Baghdad-Kirkuk road from the Tuz Khurmatu side
Yesterday at 4:36 am by Rocky
» Foreign oil companies in Kurdistan hosted by Baghdad to solve the oil crisis “face to face”
Yesterday at 4:34 am by Rocky
» President Rashid: Iran is a very important neighbor of Iraq and our relationship with it is good and
Yesterday at 4:32 am by Rocky
» Warnings and fears about the Basra-Oqba project: Its goal is normalization with Israel
Yesterday at 4:30 am by Rocky
» The Iraqi Trade Bank warns of fake pages bearing its name and logo
Yesterday at 4:28 am by Rocky
» Despite Al-Maliki's remarks, the State of Law bloc rules out challenging the 2024 budget schedules
Yesterday at 4:26 am by Rocky
» Revealed in numbers the completion rates achieved in the Al-Faw Grand Port projects... Transport for
Yesterday at 4:25 am by Rocky
» He confirmed that there is high coordination with the Journalists Syndicate regarding freedom of opi
Yesterday at 4:24 am by Rocky
» An environmental specialist points out the dangers of the lack of water imports to Iraq
Yesterday at 4:23 am by Rocky
» The Iraqi Communist: Voting on the budget schedules before approving the final accounts...a violatio
Yesterday at 4:22 am by Rocky
» Everything is polluted in Iraq: the air, the water and the land
Yesterday at 4:21 am by Rocky
» Parliamentary Security reveals the latest developments in the joint committee between Iraq and the i
Yesterday at 4:19 am by Rocky
» Oil explains the details of exploring oil and gas fields in the western regions
Yesterday at 4:18 am by Rocky
» Al-Sumaria: Strict judicial measures against telecommunications companies that violate instructions
Yesterday at 4:16 am by Rocky
» Trade exchange between Iranian Azerbaijan and the Kurdistan Region rises to one billion dollars
Yesterday at 4:14 am by Rocky
» Finance announces financing the salaries of Kurdistan Region employees due for the month of May
Yesterday at 4:13 am by Rocky
» American report: Saddam misled Washington and the invasion of Iraq was a disaster
Yesterday at 4:11 am by Rocky
» Al-Sudani and Al-Hakim discuss fighting corruption and improving service conditions
Yesterday at 4:10 am by Rocky
» The Prime Minister opens the first forum of governorate councils
Yesterday at 4:09 am by Rocky
» Al-Sudani renews his government’s support for the work of the provincial councils
Yesterday at 4:07 am by Rocky
» Washington calls on Baghdad to hold accountable those targeting American companies: The attacks targ
Yesterday at 4:06 am by Rocky
» The Housing Fund intends to grant 17,000 loans during 2024
Yesterday at 4:05 am by Rocky
» Distribution of salaries before the Eid holiday... Finance surprises employees
Yesterday at 4:03 am by Rocky
» More than 12 million bank accounts to date
Wed 05 Jun 2024, 7:14 am by wciappetta
» Al-Rafidain: About 1,502 loans were issued to those registered under the Riyada initiative since las
Wed 05 Jun 2024, 6:59 am by Rocky
» Al-Maliki: There is no intention to approve the general amnesty law
Wed 05 Jun 2024, 6:57 am by Rocky
» Al-Sudani: Understandings with France amounting to one billion euros to build industrial projects...
Wed 05 Jun 2024, 6:48 am by Rocky
» Al-Sudani: The available factories for construction materials cover only a quarter of the need
Wed 05 Jun 2024, 6:46 am by Rocky
» An economist indicates the absence of the private sector in the 2024 budget
Wed 05 Jun 2024, 6:44 am by Rocky
» Central Bank of Iraq sales exceeded $270 million at today’s auction
Wed 05 Jun 2024, 6:43 am by Rocky
» The Iraqi budget is moving toward “publishing and disbursing” without presidential approval
Wed 05 Jun 2024, 6:42 am by Rocky
» A government parliamentary agreement regarding residents of slums
Wed 05 Jun 2024, 6:41 am by Rocky
» Al-Rafidain: Implementing the comprehensive banking system in the White Palace branch
Wed 05 Jun 2024, 5:22 am by Rocky
» Sudanese sponsors the signing of a cooperation agreement between the Trade Bank and the German Expor
Wed 05 Jun 2024, 5:17 am by Rocky
» Financial inclusion in Iraq: a success story that defies the odds
Wed 05 Jun 2024, 5:14 am by Rocky
» Parliamentary Finance: All revenues are not enough to meet the country’s needs, and the budget prohi
Wed 05 Jun 2024, 5:13 am by Rocky
» Iraqi Business Council: The budget schedules are flexible and include sacred paragraphs
Wed 05 Jun 2024, 5:11 am by Rocky
» Democratic Party: The cessation of oil exports through Türkiye has caused Iraq huge losses
Wed 05 Jun 2024, 5:08 am by Rocky
» The government's lack of seriousness in removing the Americans leaves Iraq exposed to them
Wed 05 Jun 2024, 5:06 am by Rocky
» Al-Sudani sponsors the signing of an agreement between the TBI Bank and a German institution
Wed 05 Jun 2024, 5:05 am by Rocky
» Water scarcity and air pollution...the most prominent challenges facing Iraq
Wed 05 Jun 2024, 5:03 am by Rocky
» Parliamentary Finance: Contract employees are included in the budget
Wed 05 Jun 2024, 5:03 am by Rocky
» An investigation committee will be formed into the file of trainees of Korean companies / document
Wed 05 Jun 2024, 5:02 am by Rocky
» Parliamentary Finance: The region’s share in the budget is still unclear
Wed 05 Jun 2024, 5:00 am by Rocky
» A representative wonders about the fate of 57 trillion dinars in the budget
Wed 05 Jun 2024, 4:59 am by Rocky
» A new group of targets of restaurants and foreign agencies was arrested in Baghdad
Wed 05 Jun 2024, 4:58 am by Rocky
» Including transfers and attracting investors.. The Supreme Judiciary determines the advantages of re
Wed 05 Jun 2024, 4:56 am by Rocky
» International Finance Corporation.. An agreement to qualify youth in Iraq and Lebanon
Wed 05 Jun 2024, 4:55 am by Rocky
» Oil reveals new government directives related to 4 sectors
Wed 05 Jun 2024, 4:53 am by Rocky
» The Council of Ministers takes a series of economic decisions
Wed 05 Jun 2024, 4:52 am by Rocky
» Did the 2024 budget schedules do justice to the Kurdistan Region?
Wed 05 Jun 2024, 4:50 am by Rocky
» Parliament's finances determine the amount of disbursement during 2024
Wed 05 Jun 2024, 4:49 am by Rocky
» “You will lose confidence in them.” A deputy criticizes a “dangerous phenomenon” committed by member
Wed 05 Jun 2024, 4:48 am by Rocky
» Sudanese Advisor: Iraq's external debt has fallen to 9 billion dollars
Wed 05 Jun 2024, 4:47 am by Rocky
» Erbil markets 300 food trucks to the rest of the governorates daily
Wed 05 Jun 2024, 4:46 am by Rocky
» The Prime Minister inaugurates the second specialized workshop to support the private industrial con
Wed 05 Jun 2024, 4:45 am by Rocky