An oil field in Iraq's southern Rumaila area. Photo: AFP
ERBIL, Kurdistan Region – Iraq’s expected Strategic Energy Plan, an ambitious 17-year venture that calls for a whopping $620 million investment to develop energy-related infrastructure in the war-torn country, is being declared a pipe dream by some experts.
The financing required for the plan is equal to five years of oil revenues at a selling price of $90 per barrel. The plan suggests that Iraq’s oil revenues in that period will reach up to six billion dollars per day (bpd), about double the present output.
“This is impossible,” said Middle East energy expert Adil Mirza. “In order for Iraq to procure the capital required by that plan, it must become the best and most secure place for international investors,” he added.
The Strategic Energy Plan, a 350-page draft that took 18 months to prepare, has not been officially announced so far. It was prepared by the Iraqi oil, electricity, planning and finance ministries, together with the International Bank and the American Consultancy Company of Booz & CO.
The document outlines short-term, mid-term and long-term goals, aiming to increase current production of 3.2 million bpd to 4.5 million by next year, and to nine million bpd by 2020.
During the tenure of Hussein Shahristani as oil minister, output was estimated to reach 12 million bpd by 2017, making Iraq the biggest rival to international oil titan Saudi Arabia. But that goal was never achieved, and experts say Iraq still does not have the ability to raise output to those levels.
Many energy experts believe the new goals to be a fantasy, claiming that the volatile security situation in Iraq indicates the country could be heading toward a civil war, and therefore unlikely to attract the needed capital.
They also expect the plan to be shot down by parliament, which is divided over energy issues and has failed since 2007 to pass the Oil and Gas Law to regulate the distribution of energy revenues. The absence of such a law has been behind the escalation of disputes between the autonomous and energy-rich Kurdistan Region and the central government in Baghdad.
Tamir Ghazban, energy advisor to Iraqi Prime Minister Nuri al-Maliki, said recently that Baghdad does not depend on the Kurdistan Region to reach its immediate oil production targets.
“For reaching the goal of 4.5 million barrels a day, we depend on 15 different Iraqi provinces besides the Kurdistan Region,” he said at an Iraqi energy conference in London.
The draft plan does not mention how to resolve hanging energy issues between the central government and the Kurdistan Region.