[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.] 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.
Today at 7:52 am by Rocky
» utube 3/28/24 MM&C Iraqi Dinar - IQD Update - SWIFT - Purchasing Power - Urban Renaissance - Releas
Today at 7:51 am by Rocky
» Al-Mandalawi: Iraq is witnessing competition between major companies...and the House of Representati
Today at 7:49 am by Rocky
» The President of the Republic stresses the importance of the role of programmers in developing the w
Today at 7:46 am by Rocky
» The Minister of Industry and Minerals follows up on the technical and production performance of the
Today at 7:45 am by Rocky
» The Minister of Finance is following up on the field the progress of the newly implemented ASYCUDA s
Today at 7:44 am by Rocky
» Statistics: There are more than 15 million bank accounts in Iraq
Today at 7:42 am by Rocky
» Representative: One paragraph hinders the passage of a general amnesty within the House of Represent
Today at 7:37 am by Rocky
» Parliamentary Finance: “The draft federal budget law will be devoid of new job grades.”
Today at 7:36 am by Rocky
» Parliamentary action to resolve the fate of “food security contracts” in 15 governorates
Today at 7:35 am by Rocky
» 300 factories turned into "iron scrap" in Diyala
Today at 7:34 am by Rocky
» A deputy expects the dollar exchange rate to reach 140 Iraqi dinars
Today at 7:32 am by Rocky
» Al-Yasiri: The American administration is working hard to destroy the Iraqi economy
Today at 7:31 am by Rocky
» Infographic: The highest annual salaries of leaders of Arab countries
Today at 7:30 am by Rocky
» Communications announces that the electronic signature project has reached advanced stages
Today at 7:29 am by Rocky
» Parliamentary Integrity presents a file related to Kuwaiti violations of Iraqi oil
Today at 7:27 am by Rocky
» Parliamentary move to include amendments to Parliament’s internal regulations on the agenda (documen
Today at 7:25 am by Rocky
» The Iraqi President urges the Minister of Finance to expedite the payment of salaries to the Kurdist
Today at 7:23 am by Rocky
» Central Bank of Iraq sales exceeded $251 million at today’s auction
Today at 7:21 am by Rocky
» The Foreign Minister questions the "Iraqi resistance" attacks against Israel: the other side did not
Today at 7:20 am by Rocky
» The Minister of Labor announces progress in the electronic payment system
Today at 7:17 am by Rocky
» Interior Ministry: For the first time, we controlled the smuggling of petroleum derivatives by 98 pe
Today at 7:16 am by Rocky
» International companies offer offers to invest in the Dhi Qar marshes.. What distinguishes them?
Today at 7:15 am by Rocky
» “Tough” comments on interest rates raise the dollar globally
Today at 7:14 am by Rocky
» Iraq is the fifth largest oil supplier to South Korea in a month
Today at 7:12 am by Rocky
» Recovering more than 100 billion as a result of more than 200,000 employees on social welfare
Today at 7:11 am by Rocky
» The Sudanese consultant announces the completion of Baghdad Metro track designs
Today at 7:08 am by Rocky
» Al-Sudani stresses ending the problem of triple-shift schools
Today at 7:07 am by Rocky
» Iraq begins building two new tankers to transport petroleum products
Today at 7:06 am by Rocky
» Forming a council for “competition and preventing monopoly”
Today at 7:04 am by Rocky
» Features of an Iraqi-Turkish agreement regarding the status of the Kurdistan Workers’ Party
Today at 7:02 am by Rocky
» {Al-Buzrajiya} between the hammer of fraud and the power of the owners
Today at 7:01 am by Rocky
» Ministry of Oil: The gas sector is witnessing great development
Today at 6:59 am by Rocky
» An agreement with Britain in the field of securities
Today at 6:58 am by Rocky
» Discussions between Baghdad and Ankara to open a new port
Today at 6:57 am by Rocky
» Trade: About 11 million citizens updated their new card information
Today at 6:56 am by Rocky
» Electronic payment is sustainable growth
Today at 6:55 am by Rocky
» Experts: Iraq qualifies to be an important tourist country
Today at 6:54 am by Rocky
» Amending the Health Professions Law “robs” scientists of the central appointment 3 years after it wa
Today at 5:20 am by Rocky
» Is the “blessings package” that Erbil paid to the citizens of Kurdistan related to the elections?
Today at 5:19 am by Rocky
» Exceeded 5,000 projects.. Allocating 10 trillion dinars to support governorate reconstruction plans
Today at 5:18 am by Rocky
» “His need no longer exists.” Parliamentary Finance confirms the necessity of returning the retiremen
Today at 5:17 am by Rocky
» To communicate with the bases... 12 directives from Al-Sadr, including blocking numbers for non-gove
Today at 5:15 am by Rocky
» In an interview with "Baghdad Today"... an Iranian researcher reveals the importance of Haniyeh's vi
Today at 5:14 am by Rocky
» After it was 63 trillion in 2023... the 2024 budget deficit will rise to 80 trillion dinars
Today at 5:13 am by Rocky
» Parliament reveals the date of the first evaluation of the governors and determines the party respon
Today at 5:11 am by Rocky
» The President of the Republic informs Al-Araji and Al-Basri: Momentum must be mobilized to eliminate
Today at 5:10 am by Rocky
» Can the Federal Court sue others? A legal clarification of its response mechanism to abuse
Today at 5:09 am by Rocky
» Despite promises to soon stop burning gas.. What is the secret behind Iraq renewing the Iranian gas
Today at 5:07 am by Rocky
» Advisor to Al-Sudani: The dollar is on the way to further decline, and 70% of Iraqi traders have ent
Today at 5:06 am by Rocky
» Iraq exported more than 99 million barrels of oil last February
Today at 5:04 am by Rocky
» Barzani “gives good news” to Kurdistan employees: salaries, land, and loan exemptions
Today at 5:03 am by Rocky
» Alia Nassif: Nour Zuhair returned to the port of Umm Qasr to make deals.. An influential Shiite forc
Today at 5:02 am by Rocky
» The Prime Minister announces the movement of nearly 500 stalled projects
Today at 5:00 am by Rocky
» A government strategy to enhance investments.. Iraq is on the verge of a new era of economic develop
Today at 4:59 am by Rocky
» Ranging between 20% and 50%.. The Kurdistan government decides to reduce service fees, customs dutie
Today at 4:58 am by Rocky
» Al-Sudani: The reform approach in the security services is an integral part of reform in other secto
Today at 4:56 am by Rocky
» Everyone in Iraq wants the Sudanese visit to Washington to be successful, even the factions!
Today at 4:55 am by Rocky
» Sources and experts expect the agenda.. in his bag is the Baghdad dollar and the factions’ truce, bu
Today at 4:54 am by Rocky
» The decision to raise gasoline prices arouses the ire of drivers...a reminder of the large demonstra
Today at 4:53 am by Rocky
» Parliamentary services: 3 important hospitals in Baghdad will enter service at the end of the year
Today at 4:52 am by Rocky
» Iraq signs a contract to supply Iranian gas for a period of five years
Today at 4:50 am by Rocky
» Parliament adds a voting paragraph on amending the Penal Code to its agenda
Today at 4:49 am by Rocky
» His political advisor: We are not afraid of Sudanese entering the elections alone
Today at 4:48 am by Rocky
» Parliamentary services explain the reasons for the rise in real estate prices in Baghdad
Today at 4:46 am by Rocky
» Attia, criticizing the government's decisions: "The citizen's feathers will be ruffled without servi
Today at 4:45 am by Rocky
» Parliamentary Communications: Zain Iraq and Asiacell did not pay their debts
Today at 4:44 am by Rocky
» The Governor of Karbala announces the imminent establishment of the largest industrial city in the c
Today at 4:43 am by Rocky
» A government determination to end the issue of displaced persons in the middle of this year
Today at 4:42 am by Rocky
» Iraq buys gas from Kurdistan to generate electricity
Today at 4:41 am by Rocky
» Parliamentary signatures to include an amendment to the internal regulations to decide the choice of
Today at 4:40 am by Rocky
» In Basra.. a demonstration against foreign workers in Iraqi companies (video)
Today at 4:38 am by Rocky
» Al-Samarrai: Presidency of Parliament is an entitlement to the constituents, and calling it a “frame
Today at 4:36 am by Rocky
» Electronic food supplies in 6 governorates... covering 11 million Iraqis and “writing off” about 700
Today at 4:34 am by Rocky
» Corruption of the Ministry of Transport.. Representatives express their surprise at the minister’s s
Today at 4:32 am by Rocky
» The biggest supporter of the invasion of Iraq.. The death of former US Senator Joe Lieberman
Today at 4:31 am by Rocky
» Iraq is ranked “late.” A list of the most and least safe Arab countries for women
Today at 4:30 am by Rocky
» The Council of Ministers exempts the Gulf Interconnection Authority from guarantee fees: it is a gov
Yesterday at 7:48 am by Rocky
» The Iraqi government raises the size of the 2024 budget, and Parliament is “surprised”
Yesterday at 7:46 am by Rocky
» Popular Movement: We have many economic options away from American hegemony
Yesterday at 7:42 am by Rocky
» The Oil Parliament stresses the need to transfer part of the revenues to the producing governorates
Yesterday at 7:41 am by Rocky
» It will cover 14 regions in eastern Iraq.. A deputy reveals the “border electricity” project
Yesterday at 7:40 am by Rocky
» Experts Warn Mass Migration Threatens US Food Security
Yesterday at 7:37 am by Bama Diva
» Al-Fateh: America occupies Iraq through agreements
Yesterday at 7:37 am by Rocky
» Anger in Iraq over a "sudden decision"... and a reminder of a "general strike" that paralyzed the co
Yesterday at 7:34 am by Rocky
» Parliamentary Committee: Parliament is discussing today a decision that “disturbed” the Iraqis
Yesterday at 7:33 am by Rocky
» Ministry of Electricity: Our production will reach 27 thousand megawatts by May
Yesterday at 7:31 am by Rocky
» Diagnosing the “most important” problems in the oil file between Baghdad and Erbil.. What is the rel
Yesterday at 7:30 am by Rocky
» The Iraqi Fiqh Academy and the Sunni Endowment issue a fatwa to pay Zakat al-Fitr
Yesterday at 7:28 am by Rocky
» The National Bank of Iraq continues its digital transformation by launching its new banking system a
Yesterday at 7:26 am by Rocky
» Parliamentary Investment and the Central Bank are discussing the housing initiative
Yesterday at 7:25 am by Rocky
» The Prime Minister announces the restart of 500 suspended projects
Yesterday at 7:23 am by Rocky
» Al-Barti assesses the region's employees: Your salaries are insured and will be paid after resettlem
Yesterday at 7:21 am by Rocky
» Iraqi-American discussions in anticipation of the Sudanese visit
Yesterday at 7:20 am by Rocky
» Iraq and Turkey hold meetings in Ankara to discuss technical issues related to the development road
Yesterday at 7:17 am by Rocky
» A government parliamentary agreement to support budget revenues and governorate allocations for inve
Yesterday at 7:16 am by Rocky
» Oil: The gas sector is witnessing great development
Yesterday at 7:15 am by Rocky
» A Kurdish-French agreement to develop trade and economic relations
Yesterday at 7:13 am by Rocky
» Exchange companies in Mosul demand that they be entered into the currency selling window
Yesterday at 7:12 am by Rocky