Iraq was the second-largest crude oil producer in the Organisation of the Petroleum Exporting Countries (OPEC) in 2014, and it holds the world's fifth largest proved crude oil reserves after Venezuela, Saudi Arabia, Canada, and Iran. Most of Iraq's major known fields are producing or in development, though much of its known hydrocarbon resources have not been fully exploited. All of Iraq's known oil fields are onshore and the largest fields in the south have relatively low extraction costs owing to uncomplicated geology, multiple supergiant fields, fields that are typically located in relatively unpopulated areas with flat terrain, and the close proximity to coastal ports.
Iraq is re-developing its oil and natural gas reserves after years of sanctions and wars. Iraq's crude oil production grew by 950 000 bbl/d over the past five years, increasing from almost 2.4 million bbl/d in 2010 to almost 3.4 million bbl/d in 2014. These production estimates include oil produced in the Iraqi Kurdistan Region, the semiautonomous northeast region in Iraq governed by the Kurdistan Regional Government (KRG). Despite this growth, Iraq's production has actually grown at a slower rate than Iraq had expected because of infrastructure bottlenecks in the south, supply disruptions in the north, and delays in awarding contracts.
The Iraqi government has set ambitious oil production targets. The government is currently renegotiating field production targets set in Technical Service Contracts (TSCs) previously signed with international oil companies (IOCs). Based on some of the target revisions that have already been announced, the Energy Intelligence Group estimates that Iraq is now aiming for crude oil output of 9.0 million bbl/d by 2020. Key challenges the Iraqi government faces to achieve this target include expanding southern export infrastructure and storage capacity, building a large common water supply and re-injection system in the south, passing a hydrocarbon law, a slow administrative process of doing business, and less favourable contract terms to attract IOCs to invest in new projects. Also, political instability, sectarian violence, and the threat of the Islamic State of Iraq and the Levant (ISIL) spreading to other areas of Iraq pose significant uncertainty for Iraq's future.
Adapted from press release by Joe Green