Presentation from the international press launch – WEO Iraq Energy Outlook Special Report

1. 9 October, London
© OECD/IEA 2012

2. Iraq: the energy context
 Oil & natural gas resources are immense & the costs of production
are among the lowest in the world
 Already the world’s 3rd largest oil exporter, with plans to expand
oil & natural gas production rapidly
 Natural gas is an under-utilised resource – more than half of the
natural gas produced is flared
 Catching up & keeping pace with rising demand for electricity
is critical to national development
 Energy infrastructure & institutions, while improving, continue to be
a serious constraint:
 Legacy of damage & poor maintenance
 Lack of consensus on governance of the hydrocarbons sector
© OECD/IEA 2012

3. Oil is the cornerstone of Iraq’s economy
GDP, share of oil export revenues, population in 2011
$578 billion
$482 billion
$177 billion
$115 billion GDP
Oil export
revenues
72% 55% 24% 52%
Iraq Kuwait Iran Saudi Arabia
31 million 3 million 75 million 28 million Population
Twin challenges for Iraq are to increase its oil revenues & then to use them
to support greater diversification of its economy
© OECD/IEA 2012

4. Oil is poised for a major expansion
Iraq oil production Iraq oil exports
mb/d 9 mb/d 9 Other
North
8 Centre 8 Asia
7 South 7
6 6
5 5
4 4
3 3
2 2
1 1
2012 2020 2035 2012 2020 2035
Production more than doubles by 2020 & reaches more than 8 mb/d by 2035,
with Iraq becoming a major supplier to Asian markets, especially to China & India
© OECD/IEA 2012

5. What will determine the pace of growth?
 Political consensus on oil governance & legal framework
 Speed & coordination of investment along the supply chain
 Avoiding bottlenecks in storage & transportation
 Sufficient water to support oil production
 Drilling rigs & expertise
 Iraq’s long-term oil & natural gas development strategy
 Our High Case of 9 mb/d by 2020 would equal the highest sustained
growth in the history of the oil industry
 International market conditions
© OECD/IEA 2012

6. Iraq leads global oil production growth
Growth in oil production, 2011-2035
Non-OPEC
12%
Iraq
45%
Rest of OPEC
42%
Iraq accounts for 45% of the growth in global production to 2035;
by the 2030s it becomes the second-largest global oil exporter, overtaking Russia
© OECD/IEA 2012

7. Iraq takes its place on the global gas map
Growth in key natural gas producers, 2011-2035
China
Russia
United States
Australia
Turkmenistan
Iraq
Qatar
Iran
Brazil
Algeria
50 100 150 200 250 bcm
Iraq can potentially provide a very cost-competitive gas supply by pipeline to
neighbouring countries or to Europe and – via liquefied natural gas – to Asia
© OECD/IEA 2012

8. Gas moves from sideshow to centre stage
Iraq’s natural gas balance
bcm 100
Production
80 Demand
60
40
20
2010 2015 2020 2025 2030 2035
Reductions in gas flaring & development of new gas fields will be needed
to meet Iraq’s growing domestic needs & its export ambitions
© OECD/IEA 2012

9. Catching up with power demand
Iraq electricity generation
TWh 300
Shortfall in generation
250 Hydro & other renewables
Natural gas
200
Oil
150
100
50
2010 2015 2020 2025 2030 2035
Oil helps to eliminate the power deficit in 2015. But without a longer-term shift to
gas-fired power, Iraq would forego more than $500 billion in oil export revenue
© OECD/IEA 2012

10. A chance to transform Iraq’s prospects
Iraq annual oil and natural gas revenues
Billion dollars 350
(2011)
300
250
200
150
100
50
2012 2020 2035
$5 trillion in cumulative export receipts is 10% of all revenues
from global oil trade; Iraq’s GDP in 2035 rises to the level of Saudi Arabia today
© OECD/IEA 2012

11. A step-change in energy investment
Iraq annual average requirement for energy investment
Billion dollars 30
(2011) Natural gas
25 Electricity
Oil
20
15
10
5
2011 2012-2020 2021-2035
The overall investment bill of $530 billion is 10% of oil export revenues,
but annual spending needs to increase quickly over the current decade
© OECD/IEA 2012

12. Delay would come at a high price
Iraq oil production profiles
mb/d 10
Central Scenario
8
6
Delayed Case
4
2
2000 2005 2010 2015 2020 2025 2030 2035
If investment & oil production growth is delayed then global oil markets tighten,
with prices $15 higher in 2035, & Iraq’s cumulative GDP would be $3 trillion lower
© OECD/IEA 2012

13. Iraq’s transformation
has global implications
 With 45% of the anticipated growth in global production to 2035,
Iraq is key to the long-term outlook for oil markets
 Successful oil & gas development requires a shared vision for the
sector & efforts to coordinate investment all along the supply chain
 Delay would come at a high cost to Iraq and to international markets
 Productive use of natural gas is critical to a healthy domestic balance
 Oil export revenues can provide the foundations for a modern and
prosperous Iraqi economy
© OECD/IEA 2012