Iraq targeting oil production of 6 mil b/d by 2028

Iraq’s oil ministry said Sept. 7 that it's planning to increase oil production to 6 million b/d by 2028, the Iraqi News Agency reported, citing Deputy Oil Minister Bassem Mohammed Khudair.

"The ministry has an ambitious plan to support and maintain production to secure the required quantities for export," Khudair said, adding that the country aims to fully cover domestic natural gas demand for power and industry in the same period.

Officials said previously that Iraq is targeting crude production capacity of 7 million b/d by 2027, up from around 5.4 million b/d currently.

Separately, the ministry announced Sept. 7 that the first multilateral oil well was successfully drilled at the East Baghdad South field by Chinese firm EBS 12 days ahead of schedule. The company aims to further increase production at the field, which is now 40,000 b/d, the ministry said in a statement. It supplies crude oil to the Al-Quds power station in Baghdad and the Dora refinery.

“The ministry seeks to invest in the fields with the latest global technology," Khudair said.

Chinese companies are set to play a key role in Iraq’s upstream development plans. Chinese companies won the bulk of 14 contracts included in a May upstream bidding round, and approved for development in late August. This continues a recent trend of Chinese investment replacing western investment in Iraqi projects. Sixteen fields and blocks included in the bidding round received no bids. The bidding round had been delayed several times, with Iraq finally including lower royalty rates to boost interest.

Iraq faces a number of challenges in reaching its output targets including limited export capacity and disputes between the federal government and the semi-autonomous Kurdistan region in the north. Exports from northern Iraq via the Turkish port of Ceyhan have been suspended since March 2023 over a disagreement with Turkey. Ceyhan exports typically included around 375,000 b/d of Kurdish Blend Test and about 75,000 b/d of Kirkuk grade.

Iraq is aiming to boost crude output and exports, which are a crucial part of federal revenues, amid a price slump. Current oil prices are well below the country’s fiscal breakeven oil price, estimated at $97/b for 2024 and $103/b for 2025 by S&P Global Commodity Insights.

Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $73.025/b on Sept. 6 , down from 2024 highs of more than $93/b in early April.

In the short term, Iraq’s plans to increase output are complicated by its commitments under the OPEC+ crude production deal. Iraq is under increasing pressure to comply with its quota. Its production was 4.33 million b/d in July, compared with a quota of 3.93 million b/d, according to the latest Platts OPEC+ survey by Commodity Insights.

Growing OPEC+ concern about the group’s production levels led it to delay by two months its plans to bring barrels back to the market in the fourth quarter. There could be further changes to plans either at extraordinary or scheduled meetings.

The Joint Ministerial Monitoring Committee which is overseeing the agreement is next due to meet Oct. 2. A full OPEC+ ministerial meeting is scheduled for Dec. 1 in Vienna.