Iraq’s upstream sector is undergoing rapid change, with a diversified ecosystem of companies and significant investments in promoting oil and gas production. However, critical infrastructure challenges still need to be overcome and there is a lack of exploration activity.
remain a challenge.

According to Wood Mackenzie’s report “Iraq’s upstream opportunities: a review,” Iraq’s gas production could more than double to 4.4 bcfd by 2030, and oil production could reach 5.5 million b/d over the same period. “Iraq’s upstream industry is changing dramatically and has the resources to significantly increase both oil and gas production,” said Alexandre Araman, director at Wood Mackenzie. “Corporate interest is increasing as there are numerous large entry opportunities. Many of the major corporations are rethinking their presence – given the low returns offered by historically tight fiscal conditions – and have ready buyers in the Southeast Asian NOCs and the state-backed Chinese players.”

Source: Wood Mackenzie Lens. *Iraq-Turkey pipeline. **Without Sealine-4 and 5. Sealines are planned underwater pipelines
Connecting the Fao terminal with the Al-Basra oil terminal and part of the expansion of export infrastructure in southern Iraq
projects.

According to the report, most of the potential growth will come from the major oil fields in the south, such as Rumaila, West Qurna, Zubair and Majnoon.
However, the report also highlights that many challenges remain.

“Operators currently have to overcome several obstacles if they want to increase their production, especially in terms of infrastructure, as there is currently insufficient capacity for export pipelines and terminals and water injection,” said Araman. “There are also financial problems as it is difficult to extract value from barrels.”
The tough fiscal conditions have hampered both foreign investment and exploration activities. According to Wood Mackenzie, only five exploration wells have been drilled in Iraq since 2013, despite more than 150 billion barrels of oil reserves.

However, recent licensing rounds in 2024 have seen significant interest from Chinese companies, demonstrating growing interest from Asian investors. This also highlights how Iraq’s corporate ecosystem has evolved and expanded over time, as more players from more diverse regions, but particularly Asia, have been attracted to Iraq’s upstream opportunities. However, this attention has been focused on discovered resources rather than exploration potential.

“Iraq’s tax environment remains one of the least competitive in the Middle East and much more needs to be done to increase interest in exploration,” said Araman. “If this issue is resolved, we will likely see more activity from Asian players as the corporate landscape in Iraq shifts from west to east. With improvements in tax conditions and critical infrastructure, a window of opportunity should emerge for more M&A activity and future production growth.”

Araman continued: “The country’s ambitious goal of doubling gas production, ceasing flaring and ending import dependence is supported by 100 trillion cubic feet of resources and political will, which also presents new investment opportunities. Due to the nature of the fiscal conditions, these gas opportunities are in some cases more commercially attractive than oil production. So we are now seeing some of the major players turning their attention more to gas-related opportunities.”

Iraq – planned gradual increase in gas production for key hubs and fields
Source: Wood Mackenzie Lens.