Iraq has announced the discovery of a new oil field in the southern East Baghdad group of fields that may add 2 billion bbl of medium and light crude to the country’s oil reserves.
State-owned Midland Oil Co. reported the find, made in collaboration with EBS (a local subsidiary acting for China’s ZhenHua Oil in Iraq) after well tests projected output of 5,000 B/D, according to the Iraqi News Agency.
The discovery supports the country’s plan, announced by Iraqi’s Oil Minister Hayan Abdul-Ghani a year ago, to boost Iraq’s oil reserves to160 billion bbl. By 2028, Baghdad aims also to grow its production capacity to 6 million B/D, Arabian Gulf Business Insight (AGBI) reported in September, citing government sources.
Wood Mackenzie’s more conservative estimate puts Iraq’s oil output at 5.5 million B/D by 2030 with Baghdad’s gas production more than doubling by the same time to 4.4 Bcf/D, as the analytics firm reported in its Iraq Upstream Summary published in February 2024.
With oil exports funding more than 90% of Iraq’s budget, the government in 1H 2024 stepped up efforts to attract foreign investment by offering 30 exploration blocks in its fifth-plus and sixth licensing rounds, which were largely won by Chinese companies interested in frontier exploration and field development opportunities.
However, exploration activities leading to the most recent East Baghdad field discovery were not related to last year’s licensing rounds.
Production Exceeds OPEC’s Quota
In terms of oil, Iraq is OPEC’s second-largest producer after Saudi Arabia, ranking fifth globally in proven oil reserves that boast 145 billion bbl, representing 17% of proven reserves in the Middle East, according to AGBI.
Iraq currently produces 4 million B/D of oil, and it remains under OPEC’s scrutiny as it has yet to compensate for having been producing more than its assigned quota since January 2024.
Analysts quoted by AGBI predict Iraqi will grow its oil production by 200,000 B/D by year-end 2026 with most of that concentrated in the southern Basra region, the Diyala region east of Baghdad, and northeastern Kirkuk.
WoodMac recently noted that Chinese dominance in Iraq’s 2024 licensing rounds highlights an evolution of “Iraq’s corporate ecosystem … as more players from more diverse geographies, but Asia in particular, have been attracted to Iraqi upstream opportunities.”
Iranian Gas Imports Targeted
Iraq’s Oil Minister Abdul-Ghani detailed at a news conference on 21 January the government’s plans to reduce costly gas imports from Iran which currently supply a third of Iraq’s domestic demand.
Iraq aims to boost gas production by nearly 190 MMcf/D in 2025 after two gas projects in the southern oil hub of Basra add 140 MMcf/D, while TotalEnergies will also produce 50 MMcf/D after an emergency request by Baghdad, the oil minister said.
Chinese companies have seemingly filled the void as Western international companies pulled back from doing business in Iraq to sidestep a variety of political and economic risks, with 50 to 67% of Iraq’s oil now produced from fields where Chinese companies are involved as investors, producers, or in field servicing roles, according to a January 2025 policy brief published by the Netherlands Institute of International Relations.
Out of the 30 exploration blocks put to bid in spring 2024, Baghdad awarded 10 licenses of which 7 went to Chinese companies while pre-qualified European and Arab consortia returned home empty-handed, the Dutch think tank pointed out.
Western Majors Again in Play
TotalEnergies took initial steps to reverse this trend when in 2023 it became the first major to sign a significant new deal with Iraq—a $27 billion investment focused on the multifaceted Gas Growth Integrated Project which aims to capture flare gas in Basrah.
In December 2024, BP finalized technical terms with Iraq’s government to redevelop oil and gas fields operated by North Oil Company in Kirkuk under a nonbinding a memorandum of understanding signed the previous August, targeting the Baba and Avanah domes and three adjacent fields—Bai Hassan, Jambur, and Khabbaz, as reported by regional energy media.
Iraq also seems poised to finalize a development agreement with Halliburton to expand the production capacity of the Nahr Bin Omar oil field by 500% and assist in producing 300 MMcf of gas from the field.
On 16 January, Reuters quoted Director General of state-owned Basra Oil Co., Bassem Abdul Karim, as saying that Halliburton and the Iraqi government were close to signing a confidentiality agreement under which Halliburton would help Iraq increase oil production at Nahr Bin Omar to 300,000 B/D from the current 50,000 B/D and assist with China Petroleum Engineering & Construction Corp.’s $1.7 billion development at the field to produce 300 MMcf of gas.
Since the start of the new year, Iraq’s cabinet has approved a heads of agreement with Halliburton to develop the Nahr Bin Omar, Nahr Ben Umar, and Sindbad oil fields in Basra, according to a statement from the prime minister’s media office widely reported on 22 January.
Shell retains its 44% interest in the Basrah Gas Co., a joint venture between Iraq’s South Gas Co. (51%) and Mitsubishi Corp. (5%) which processes associated gas that might otherwise be flared from the Rumaila, West Qurna 1, and Zubair oil fields.
