Iraq’s rank in proven oil reserves by country5
Iraq’s rank in OPEC production2
The way forwardNovember 4, 2015
Former Iraqi Deputy Prime Minister Rowsch N. Shaways talks to TOGY about the impact of low oil prices on the local market, federal policy and the national approach to energy diplomacy. As Iraq’s oil production and export levels continue to increase, so too does the country’s importance on the global energy stage.
What is the government doing to increase transparency, speed up decision making and create an environment conducive to business?
In 2003, the government began the process of undertaking major administrative, legislative and financial reforms. The purpose of these reforms was to increase public sector efficiency and develop the country’s financial and banking sectors.
Through the adoption of a federal and decentralised system, provinces and regions were granted wide authority to manage their own economic and developmental affairs.
We must acknowledge that the shift from a fully centralised and state-controlled business environment to a modern, decentralised, transparent and efficient environment has proven difficult and time consuming. Nevertheless, we will continue to address these difficulties and are confident that we will overcome them.
In addition, we support the efforts of Iraq’s Investment Commission to improve and enhance the country’s post-2003 investment laws.
How do oil prices in 2015 affect the country’s midstream and downstream planning?
The government’s priority, now and for the foreseeable future, will be to increase upstream exploration and production activity, in addition to expanding midstream and downstream capacities.
We can still use revenues to achieve these oil and gas priorities. Technical plans must be designed to ensure a consistent balance between oil production capacity and midstream and downstream processing capacity, and to allocate funds to each sub-sector accordingly.
Had oil prices not been as low, Iraq could have executed its long-term development plans much faster. However, with sound planning, we can still develop our oil and gas industry and attain long-term objectives at current prices.
The country is also considering joint venture arrangements with international investors to develop midstream and downstream infrastructure.
What effect will Iraq’s federal oil policy have on the collaborative effort of the Iraqi regions?
After 2003, the way forward for collaboration between the federal government and regions and provinces was enshrined in the constitution. We put together a draft hydrocarbons law in 2007. Unfortunately, this draft contained some controversial points. Therefore, there was no consensus between political parties to adopt it.
However, we are confident that the spirit of the constitution and the latest oil- and revenue-sharing agreement between Baghdad and Erbil provide a reasonable foundation for us to work on, and hopefully finalise a modern hydrocarbons law that will benefit Iraq and its people.
What is the role of energy diplomacy in furthering Iraq’s national energy strategy?
It is sensible for Iraq to use its global relationships and presence in international organisations such as the UN and OPEC to push for a stabilised global energy market. It should work to maintain reasonable energy prices and ensure that international transport channels and shipping lanes remain operational and uninterrupted.
Establishing and maintaining sustained economic relations between energy exporters and consumers are key in guaranteeing that economic and logistics markets variables will continue to serve the interests of all players involved in the energy sphere. Iraq will always use its diplomatic capabilities to achieve its goals and attempt to contain any bilateral or regional conflicts that might affect the stability of the energy market.
What is your message to the global investment community about Iraq’s true potential as an investment destination of choice?
Iraq has the fifth-largest oil reserves in the world and is the second-largest oil exporter in OPEC after Saudi Arabia. We plan to substantially increase our production and export levels, to gain an advanced position in the global energy market to contribute to global economic stability and exert direct and indirect influence.
Despite the financial challenges Iraq faces, allocations from the annual budget to the oil and gas industry remain high compared with other sectors. The country’s priority is to develop its hydrocarbons infrastructure to place Iraq in an advanced international position.
As the government continues to improve its administrative, financial and investment framework and procedures, we anticipate that Iraq will continue to be an attractive environment for international businesses and investments.