There is no doubt that Iraq has the potential to be one of the globe's leading oil exporters. The country’s conventional oil reserves could match, or even surpass, that of Saudi Arabia, currently the second largest oil exporter in the world. Over half of Iraq’s potential remains undiscovered and there will be a tremendous amount of interest in the country's oil for years to come.
However Iraq faces major challenges to the future of its oil industry. Superficially things look OK: daily production is just below 3 million barrels per day and capacity is rising. Oil income has risen a whopping 60 percent but this is due more to high oil prices. In fact production only went up by 15 percent in 2011.
Ageing infrastructure, around oil and in other areas, coupled with obvious bureaucratic and security challenges as well as delay in payments and the ratification of oil contracts is holding Iraq back. A lot of these impediments are due to historical factors but the current regressive nature of government policy has also contributed to problems with oil production. Read More