Iraq, OPEC’s second-largest producer of crude, is hitting a roadblock in the next phase of expanding its oil production capacity as the appetite of international energy firms for investing in the country’s low-return environment slackens. Most international oil firms in Iraq are revising their oilfields’ plateau production levels even lower, and the discussions involved are moving slowly, Iraqi and company sources say. Growth has been the hallmark of Iraq’s oil production in the past decade with a rise of over 2.5 million barrels per day to a peak of 4.71 million bpd in late 2016, Reuters assessments show.
Iraq owes much of that growth to the likes of BP, Exxon Mobil, Lukoil, Eni, Total and Royal Dutch Shell, which oversaw the redevelopment of its oilfields after the U.S.-led invasion in 2003.But those companies have long complained that the technical service contracts Baghdad offers are too stringent and give little return on investment.Most companies in the past five years negotiated their production plateaus lower, forcing Iraq to reduce its capacity expansion plan from 12 million bpd to 9 million bpd by 2018.Now this new target is far from attainable, and Iraq aims to raise capacity to 7 million bpd by 2022.