BMI's Executive Summary

[TOP]

The Sector At A Glance

Key Insights On The Oil & Gas Sector Of Iraq

The latest Iraq Oil & Gas Report from BMI forecasts that the country will account for 6.38% of MEA regional oil demand by 2010, while providing 7.63% of supply. MEA regional oil demand rose to an estimated 10.86mn b/d last year and should average 11.08mn b/d in 2007, before reaching 11.91mn b/d by 2010. MEA gas consumption in 2006 was an estimated 373bcm, with demand of 533bcm targeted for 2010. Production last year of an estimated 510bcm should reach 774bcm by the end of the decade. While Iraq should have begun exporting gas to neighbouring Kuwait during the forecast period, it is not expected to make a significant contribution to either regional gas supply or demand over the short to medium term.

For 2007, the revised BMI forecasts are for the OPEC basket to average US$55 per barrel. Based on last year’s typical price differentials, this implies Brent at US$58.72, WTI averaging US$59.94/bbl, and Urals at US$55. Our central view is therefore that the OPEC basket price will slip from US$55/bbl this year to US$50 in 2008, before settling around US$45/bbl in 2009/2010. Should OPEC defend successfully our presumed ‘target’ price of US$55/bbl during the challenging months of 2007, then it is reasonable to assume medium-term prices may surprise on the upside.

Iraq real GDP growth is forecast by BMI at 10.2% for 2007, following an estimated 9.1% in 2006. We are assuming 14.7% growth in 2008, 11.4% in 2009 and 7.7% in 2010. We expect oil demand of an estimated 570,000b/d in 2006 to rise to 800,000b/d in 2011, depending on investment in infrastructure and the development of domestic production. International oil companies (IOCs) are in 2007 expected to join production sharing agreements with the state, which should help accelerate the growth in oil output. Based on the efforts of existing contractors and national oil industry bodies, we are forecasting average oil production of 2.15mn b/d this year. December 2006 production was 1.77mn b/d, with more than 1.4mn b/d of exports. Further field reactivation work and the initial IOC efforts point to output of an estimated 3.1mn b/d in 2011. The government has much more ambitious targets, aiming for 0.5mn b/d annual output expansion and a long-tem goal of 6.0mn b/d. However, there are major risks involving attacks on oil installations, Iraq’s OPEC entitlement and the success of new energy policy in stimulating IOC investment.

In the BMI Business Environment Ranking matrix, Iraq this quarter receives a slightly lower composite score of 34, which now ranks the country equal fifth out of 16 states included in the MEA region, alongside Angola. The overall business environment can be considered moderately attractive in a regional context, thanks largely to huge oil production upside potential and vast untapped oil and gas reserves. A great opportunity exists for IOCs once the political situation has stabilised and production sharing/licensing terms have been agreed. Political and economic risk remains very high, which offsets the positive factors.

Contents

[TOP]

Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Iraq Business Environment Industry SWOT

Chapter 3 - Regional Market Overview

Middle East/Africa Region

Table: Middle East/Africa LNG Exports/(Imports) (bcm)

Iraq

Chapter 4 - Business Environment Rankings

Iraq

Middle East/Africa Region

Chapter 5 - Iraq Business Environment Ranking

Economics – Long-term risk

Politics – Long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 6 - Oil Market Outlook

Assessing The Risks

Table Crude Price Forecasts 2007

Revised Forecasts

Table Oil Price Forecasts

Chapter 7 - Regional Supply and Demand

Middle East/Africa

Table Oil Production (000b/d) – Middle East/Africa

Table Oil Consumption (000b/d) – Middle East/Africa

Chapter 8 - Global Picture

Table Global Oil Consumption (000b/d)

Table Global Oil Production (000b/d)

Chapter 9 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: Iraq Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Iraq Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: Economic Indicators

Chapter 11 - Regional Case Study

Exxon In the Middle East

Saudi Arabia

Qatar

Kuwait

United Arab Emirates

Latest Financials

ExxonMobil 2006 Results

Chapter 12 - Competitive Landscape

Executive Summary

Table: Key Players: Iraqi Energy Sector

Overview/State Role

Chapter 13 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Network of Middle Eastern and African Oil and Gas Sources

[TOP]

BMI's Middle Eastern and African Oil and Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: