Presentation delivered before The 4 th Iraqi Petroleum Conference Iraq: Exploration, Field Development & Operation Challenges Organized by Target Exploration 13 &14 September 2012, The Imperial College, London, UK By Ahmed Mousa Jiyad Iraq/ Development Consultancy and Research Norway Phone:

Augments Petroleum Proven Reserves Enhance Production Capacities Expand Export Capacities and Diversify Export OutletsIncrease Gas Utilization & Reduce Gas FlaringDevelop Refining CapacitiesFDI-IOCs InvolvementNES, NDP and Managing the Plenty Main Determinants Facing Iraq’s Petroleum Strategy The Issues

1- Augments Petroleum Proven Reserves Current Proven Reserves: 143 bbl; 66 oilfields;

Enhance The Recovery Factor Deep Drilling MoO Exploration program The 4 th /5 th Bid Rounds

2- Enhance Production Capacities

PROVEN RESERVES, TOTAL & INCREMENTAL PRODUCTION CAPACITY 14 Oilfields 67.3 bbls (58.5%) 1.7 mbd-CPC 11.7 mbd-TPC 10.0 mbd-IPC MoO plan (mbd): 2011 – – – – 6.5

Gas Reserves & Availability Proven gas reserves: 112 tcf- trillion cubic feet, 71% associated gas, 20% non-associated and 9% dome gas. Geographically: 30% in the north and 70% in the south/middle Iraq. Probable reserves are estimated to be tcf. Associated Gas: 1mbd oil gives 0.800Bcfd- A 12.5 mbd oil gives 10.0 Bcfd Gas Fields Bid Round: Akkas, Mansuriya and Siba. Total 7.4 tcf proven Reserves. Production capacity of 820 mcfd; PPPs: 9-13; P/R ratio:~25 years. Gas Flaring: currently Iraq is producing 1.5 bcfd, of which some 700 mcfd flares.

Oilfield N/IOCs Consortium (75%) St/Pr (25%) CP- mbd (BLP) PPTs- mbd/ Y R F $/b) S.B $m IPT- FCP 000bd Reserv e billion barrels MEO $m IR $bln AlAhdadCNPC (100) SOMO a /*Y63*1.00 c Rumaila (N&S) BP (50.666), CNPC (49.333) SOMO e 2.850/ 7Y 2500 b 10% BLP West Qurna1 Exxon Mobil (80), Shell (20) OEC f 2.350/ Y % BLP ZubairEni (43.747), Oxy (31.253), Kogas (25) MOC f 1.200/ 7Y % BLP Missan (3 oilfields) CNOOC (85) TAPO (15) IDC / *Y b 10% BLP * West Qurna2 Lukoil (75), Statoil (25) NOC / 13Y MajnoonShell (60), Petronas (40) MOC0.045 d 1.800/ 10Y * HalfayaCNPC (50), Total (25) Petronas (25), SOC / 13Y * GarrafPetronas (60), Japex (40) SOC / 13Y BadraGazprom (40), Kogas (30), Petronas (20) TPAO (10), OEC / 7Y g QaiyaraSonangol (100)SOC /9Y NajmaSonangol (100)IDC /9Y * Total *

3- Expand Export Capacities and Diversify Export Outlets MoO Plan 2011 – – – – 5.65 Export outlets (mbd) NAG: 8.5 (5SPMs, BoT & KoT) Syria: 4.5 (Rehab1.25; new 1.25 L/m crude; 1.5 Hc)+ gas pipeline Turkey: 1.6 (Upgrade K-C) + new oil and gas pipelines! Nabucco?? Jordan: 10,000 bd (Trucks) IIS gas pipeline? IPSA- oil pipelie? Zerga-Jordan? ICOEE

4- Increase Gas Utilization & Reduce Gas Flaring MoO Plan Natural gas production capacity (mmcf/d): 2011 – 1, – 2, – 3, – 4,500 BGC- LNG BR1 IOCs obligations BR2 Free gas fields BR3 Priority for gas fields. Possibility for Export of Dry Gas BR4

5-Developing Refining Capacity MoO Plan: Refining capacity (000bd-input) Four new major refineries Nassiriya (300,000 bd)- $8bn; Missan (150,000 bd)- $5bn Kirkuk (150,000 bd)-$5bn; Karbala (140,000 bd)-ca$5bn The legal frameworks are outlined in two laws: Investment Law (No. 13 of 2006) through NIC and the Refinery Investment Law (No. 64 of 2007). Contractual terms outlined in 17 January 2012 invitation offer from MoO, London Conf., May ??? In addition to these new capacities the ones to be renovated are Baiji, north of Baghdad, the Doura refinery in southern Baghdad and the Basra refinery in the south

6- FDI & IOCs Involvement  The State shall guarantee the reform of the Iraqi economy in accordance with modern economic principles to insure the full investment of its resources, diversification of its sources, and the encouragement and development of the private sector. §25  The State shall guarantee the encouragement of investment in the various sectors, and this shall be regulated by law. §26.  Using the most advanced techniques of the market principles and encouraging investment to develop oil and gas wealth. §112 (2 nd ). The Constitutional Principles

$100bn to develop upstream oil and gas fields; $40bn to develop the gas industry; $30bn to increase refinery capacity; $30bn to expand export facilities. Iraq’s Investment Requirements in the Petroleum Sector $200 billion

7-NES, NDP and Managing the Plenty National Energy Strategy NES is drafted by a committee composed of the ministries of Oil, Electricity, Planning, and Finance, DPM/E (HS) and PMAC (TG & others). The World Bank financed the study and also assisting in its formulation. IEA-WEO 2012 "This strategy is going to provide the groundwork for which is the optimum scenario for Iraq to follow," "We are looking 20 years from now." (TG- PMAC)

HRD LRD LIPCU LGDO HGDO HIPCU Honeymoon Risky Delicate balance Nightmare

Where stands Iraqi today? Iraq-HIPCU Iraq-LIPCU HGDOHGDO LGDOLGDO Hone ymoon FRD

Conceptual “Situation/ Strategy” Matrix Proactive NOT Reactive Situation / Strategy components Honey- moon Delicate balance RiskyNightmare Situation Analysis/ Description Impact /Results Assessment (Measurement units, verifications, norms, etc) Policy Options : (What to do, when, how, etc) Annexes: (Methodology, data, scenarios, models etc,) Institutional and Legal Frameworks: ( Governance, Transparency and Accountability )

8-Main Determinants Facing Iraq’s Petroleum Strategy 1- Legal: Constitution, FOGL, MoO, INOC, provincial law/KRG etc; 2- Institutional: who do what under what authority..,; 3- Human resources: de facto and de jure.., de- capacitating; management and coordination 4- Logistical (sector specific) and infrastructure; 5- Structural (Macroeconomics): Absorptive capacity limitations, Dutch disease and resource curse attacks; 6- Political (domestic); 7-Geopolitical / regional; 8- International; 9- Security; 10- Oilfields specifics;