October 9, 2016 by AK
As mentioned in this comment thread on White Sun of the Desert, the question, “Was the Iraq war about oil?” deserves to be answered in the negative if “about oil” means “about unprecedentedly lucrative contracts for Exxon and Halliburton.”
It’s not the only sensible interpretation, however: “about oil” can also mean “turning Iraq into a reliable, Western-friendly producer that would keep the market supplied in the event of sanctions or wars elsewhere.” In this case, the answer could be affirmative, but ultimately depends on how much the planners of the war knew about Iraqi oil reserves and infrastructure in 2003.
What can be said with a high degree of certainty is that Iraq is now OPEC’s #2 producer of crude oil, pumping at about 4.5 mmbpd. The exact number depends on whether one relies on Iraq’s own estimates or secondary sources, but its second place within OPEC is not in dispute. Thanks to the post-war service contracts with various oil majors (including BP and Lukoil), Iraq is producing roughly 2 mmbpd more than it did during the pre-war peak in 2000, and (almost) 1 mmbpd above its previous record, set in 1979, before the war with Iran.
One could argue that 4.5 mmbpd is not that much compared with Iraq’s ambitious, occasionally sky-high targets suggested at various times by various officials, such as 12 mmbpd of capacity by 2016 (2009) and 9-10 mmbpd production by 2020 (2012). The Iraqi officials underestimated the challenges of rolling out the infrastructure necessary to support a massive surge in crude output, to say nothing of security issues (which so far have mostly affected the Kurdish north – a promising oil province dwarfed, however, by the southern fields). Nor did they anticipate the plunge in the oil price in 2014, which almost drained dry the government’s share of crude.
Relative to Iraq’s updated targets, 7 mmbpd in 2021 and 5.5-6.0 mmbpd in 2020, the current output looks like a temporary plateau on a growth path. Looking back at 2011, the first year of growth, almost 2 mmbpd has been added since, which makes adding a further 1.5 mmbpd by 2020 look like a realistic prospect. However, the additional infrastructure – water supply, electricity generation, gathering pipelines – might be too expensive to build if the oil price shows no signs of major growth.
But then again, even if its output stops increasing, in the near future Iraq will probably retain its place behind Russia, Saudi Arabia and the US, sharing the fourth position with Canada, slightly ahead of Iran and China. Before the Islamic revolution, Iran held the second place in OPEC and the fourth in the world: in 1978, its production had already come off the peak of 6.6 mmbpd but remained above 5 mmbpd, only to crush by almost 4 mmbpd in the glorious revolutionary year of 1980. Iran has never managed to attain the pre-revolutionary peaks.