Iraq has the world’s fifth largest oil resources after Venezuela, Saudi Arabia, Canada and Iran. At the beginning of 2019, oil reserves were estimated at just over 142 billion barrels, just under a tenth of the world’s known assets. The oil sector was nationalized in 1972 and the government is entirely dependent on income from the state oil companies, but the recurring war situations have both slowed production and created environmental problems.
COUNTRYAAH: Major exports by Iraq with a full list of the top products exported by the country. Includes trade value in U.S. dollars and the percentage for each product category.
Iraq has the potential to become a major player in the oil market that, by increasing or decreasing its own production, could affect the world market price. In 2009-2010, expensive contracts were signed with foreign companies to renovate some of the oil fields, which led to a plan to rapidly increase production. 2012 reached the highest levels in three decades, with 2.6 million barrels a day. In December 2014, all previous records were broken at a production rate of 4 million barrels a day and the increase was expected to continue, partly through expanded oil platforms in the Persian Gulf. But production, despite a slight increase, has not reached up to 5 million barrels.
The ambitious goals have been difficult to achieve due to the political situation, but the progress made shows that investments are making an impact. Increasing oil production is generally now a priority goal. However, in 2019, Iraq agreed to hold back, when oil-producing countries agreed on restrictions to cause oil prices to rise. Prices had fallen from 2014, roughly at the same time as Iraq was drawn into an aggravated civil war and forced to fight to expel the jihadist IS. But in 2020, Iraq, like other oil extraction countries, was forced to witness the price race: while the corona pandemic slowed oil demand, a price war raged between Saudi Arabia and Russia in particular. Oil prices reached levels not seen since 2003.
About three-quarters of Iraq’s oil is found in the Basra region in the south. The country’s largest oil fields are Majnoon, West Qurna, East Baghdad, Kirkuk and Rumaila. Iraq has several refineries, but they are old and inefficient. Struggles have taken place, among other things, around the large Baiji refinery in northern Iraq.
Abbreviationfinder: A popular acronym site in the world covering abbreviation for each country. For example, IZ stands for Iraq. Visit itypeusa for more information about Iraq.
Conflicts around the oil
The fact that most of the oil is found in Kurdish and Shia Muslim areas has political significance, as it has encouraged the Kurds and some Shi’a groups to work for increased self-determination. During the 2010s, there were fierce conflicts between the central government and the Kurdish self-government, which controlled a large part of the oil recovery but did not have their own refineries and previously did not themselves deal with oil. By agreement, the central government has handled all oil trade, while the Kurds in return have been allocated a fixed share of the income. However, the Kurds issued their own oil law in 2007 and have since signed a contract with foreign oil companies, which has sparked fierce protests in Baghdad. In 2013, the Kurdish Autonomous Government built oil pipelines to Turkey to create opportunities for its own exports.
For several years, there has been a tug of war between the central government and the self-government over the state budget. Suspended salary payments from the state to Kurdish personnel have put the Kurdish areas under pressure. The first delivery of oil via the new Turkish-Kurdish pipelines took place in the spring of 2014, but the government of self-government had difficulty finding buyers. According to some reports, Israel bought some oil, but US courts ruled that the Kurds were not allowed to sell oil in the United States without Baghdad’s permission. The Islamic State’s takeover of Mosul in 2014 and the continued attack on Kurdish areas made the situation difficult and forced a compromise, a new agreement between the central government in Baghdad and the Kurdish autonomy government in Erbil. In connection with the fighting against IS, the Kurds came to check oil fields in the disputed city of Kirkuk, but the Kurdish forces were forced away in 2017 by Iraq’s government army. At the end of 2018, an agreement was once again signed between Baghdad and Erbil on the conditions for resuming oil exports, but that does not mean that the Kurdish claims on Kirkuk have ended. The oil resources of the region could give the Kurdish state formation sustainability.
Other natural resources
Iraq also has large natural gas deposits, although they account for less than two percent of the world’s reserves. The gas is found both in the oil fields and in separate fields, in both the south and the north. Iraq has previously not invested in handling more than a small part of the gas, but production is slowly increasing and the goal is that no gas will be allowed to burn at the sources of 2021. US’s tightening policy on Iran 2018 has also led to Iraq is under pressure to reduce its gas imports.
Some other natural resources exist, mainly sulfur and phosphate. The sulfur reserves in Mishraq are considered among the largest in the world. Investigations indicate that Iraq also has unused assets of iron, lead, copper, manganese and zinc, among others.
Iraq, unlike most countries in the Middle East, previously had plenty of water. But the water supply from the Euphrates and Tigris rivers has led to conflicts with Syria and Turkey, and 2018 became a year of very severe drought. Through the Ataturk Dam in the Euphrates, Turkey can control the flow of water into Iraq. Syria can also control the flow via the Euphrates Dam. Iraq has accused the two countries of abusing their control over the water and allocating Iraq less water than the country needs and is entitled to. The extremist group IS briefly took control of the important Mosul Dam in northern Iraq in 2014, but was driven by US-backed Kurdish forces.
The water mains are getting old, with rust damage and leaks that cause a lot of water to be wasted. In 2014, there were plans for an ambitious upgrading of the management network, but IS’s takeover of the north put the plans on its head. Large financial resources had to be diverted to military operations to drive away IS.
Electricity and environment
In the past, almost all Iraqis had access to electricity, which came partly from hydroelectric power stations in the rivers. But during and after the Kuwait War in 1991, many power stations and power lines were bombed and the fighting after 2003, when Saddam Hussein’s regime overthrew, made the situation worse. Despite major investments in reconstruction, electricity shortages still exist, partly because demand has risen sharply. It has been common with electricity zoning and long interruptions, especially in the summer when electricity needs increase. Many residents have provided their own generators. After all, in the 2010s, progress has been made. Generally, the electricity supply is more reliable in the Kurdish areas, but there are also often short interruptions there. In many areas that were taken over by IS, the consequence also became severe electricity supply problems. Reconstruction needs after IS ravages,
In the fall of 2018, the Trump administration in the United States intervened to stop the Iraqi government’s plans to conclude a contract with German Siemens to build power plants. The result was that contracts were signed with both Siemens and US General Electric.
Iraq’s history from 1980 onwards has created major environmental problems. One of them is the destruction of the wetlands in the south (see Population and Languages). Extensive irrigation systems have caused soil degradation as large areas of land have been salted. In many parts of the country, bombings of factories and oil installations have released heavy metals and other dangerous substances stored in the ground and poisoned the waterways.
During the army’s offensive in 2016–2017 to recover the large city of Mosul from the terrorist sector IS, environmental damage was caused, which was feared to affect the population for many years. The problems were mainly caused by IS tactics of igniting oil wells and a factory for processing sulfur, but also by water pollution and weapons and ammunition left behind.
Famous wetlands in the south, which the Iraqis know as al-Ahwar, have been placed on the UN organization UNESCO World Heritage List.
About our sources
FACTS – ENERGY AND ENVIRONMENT
Energy use per person
1,403 kilograms of oil equivalent (2014)
Electricity consumption per person
1296 kWh, kWh (2014)
Carbon dioxide emissions in total
168 444 thousand tons (2014)
Carbon dioxide emissions per inhabitant
4.8 tonnes (2014)
The share of energy from renewable sources
0.8 percent (2015)
Sources
2010
November
The leaders are re-elected
Parliament rallies and reelects Kurdish PUK leader Jalal Talabani as president. Prime Minister Nuri al-Maliki from the Dawap Party gets the job of forming a new “national unity government”. It is approved in December and most major party groups are included.
October
Terrorist attack on Catholic Church
Suspected members of Islamic State in Iraq enter a Catholic church in Baghdad. The security police storm the church and in addition to the perpetrators, 52 people are killed. The terrorist act is described as the worst affliction of Iraq’s Christian minority in modern times, leading to an increase in the emigration of Christian Iraqis (see also Religion).
August
The United States ends combat operations
The last fighting US brigade leaves Iraq, just over seven years after the invasion. The 50,000 people who remain will provide advice and education to the Iraqis.
March
Legislative elections
Parliamentary elections are held, and despite a series of bomb attacks, it can be carried out with the help of a large police raid. No alliance can be proclaimed the obvious winner in the elections.
