EIA: Iraq's energy sector struggles lead to $15 billion financial loss in 2024
Shafaq News/ Iraq faces a $15 billion loss in the energysector amidst struggles to resolve key oil issues in 2024, the US EnergyInformation Administration (EIA) said.
According to the EIA, Iraq suffered setbacks in severalenergy files, despite persistent efforts to overcome obstacles.
The resumption of oil exports from the Kurdistan region toglobal markets became one of the most significant challenges faced by thecountry, contributing to the substantial financial losses.
Negotiations led by Baghdad’s federal government with theKurdistan Regional Government (KRG) and oil companies were unable to reach anagreement to return more than 400,000 bpd of Kurdish oil to global markets,extending the crisis for more than 21 months.
Despite the Iraqi government's approval of a budgetarymeasure to compensate the KRG for oil production and transportation costs,capped at $16 per barrel for foreign oil companies, this provision has not yetpassed through parliament.
Kurdish oil exports stopped in March 2023 after aninternational arbitration court ruled in favor of Baghdad, ordering Turkiye topay $1.5 billion for the unauthorized transport of Kurdish oil via the Ceyhanpipeline between 2014 and 2018.
Negotiations to restart the pipeline failed due toconflicting demands from the KRG, foreign oil companies, and the federalgovernment. The halt in exports has led to financial losses for Iraq, estimatedat over $15 billion by October 2024.
Complying with OPEC+ production cuts was another significanthurdle. Iraq struggled to meet its production quota under the OPEC+ agreement,with its output exceeding the allowable limit throughout 2024.
Since January, Iraq's oil production has surpassed its OPEC+limit by about 1.44 million barrels per day. Baghdad has pledged to make up forthe excess production, aiming to return to its 4 million bpd target bySeptember 2025.
Iraq, along with seven other OPEC+ members, is part ofvoluntary production cuts totaling 2.2 million bpd, announced in November 2023and extended through March 2025, with gradual returns expected over 18 months.
Additionally, Iraq participates in the extended voluntarycuts of 1.65 million bpd, implemented in May 2023 and extended until December2026. Iraq's share of these cuts is approximately 431,000 bpd, including boththe 2.2 million bpd and 1.65 million bpd cuts.
