Central to Iraq’s medium-term target to raise its crude oil production capacity to over 6 million barrels per day (bpd), up from around 4.1 million bpd this year, is the supergiant Rumaila field. One of the very largest oil fields in the world, it began production in the 1950s and, together with the Kirkuk field, has produced around 80% of the country’s cumulative oil production since then. Over the years, it remained a microcosm of the positives and negatives that characterise Iraq’s oil industry: blessed with an early abundance of easily lifted oil but plagued by subsequent underachievement in increasing production — and reducing associated gas flaring — due to endemic corruption in Iraq’s oil-sector officialdom. However, several new projects — and one in particular — hold out hope that Rumaila’s recent fortunes can be turned around and it can fulfil its true potential again, taking Iraqi oil output much higher with it.
The entire Rumaila field – split into North and South — lies around 30 kilometres north of Iraq’s southern border with Kuwait and holds an estimated 17 billion barrels in proven reserves. The first big push to enhance Rumaila’s broad operating efficiency came with the signing in June 2009 of a Technical Service Contract (TSC) by the development partners BP and China National Petroleum Corporation, together with Iraq’s State Oil Marketing Organization (SOMO). In addition to laying out the details for the establishment of the Rumaila Operating Organisation (ROO), which led to the further buildout of technologies, infrastructure, and drilling expansion across the site, the partnering oil firms secured a US$2.00 per barrel (pb) fee for every barrel of oil recovered. This was nearly half the US$3.99 pb fee originally tendered, with the threshold output level for cost-recovery payments for the partners of 1.173 billion barrels per day (bpd) from the field. At that point, given the maintenance of pressure in the wells, the International Energy Agency projected that Rumaila would be producing 1.7-2.2 million bpd by 2020, before a gradual decline in output set in from the mid-2020s. Despite the lower-than-anticipated fee per barrel, senior oil analysts spoken to by OilPrice.com at the time said the US$2/bbl payment would give the developers around a 20% rate of return on their estimated US$15 billion investment up to the expiration of the then-TSC contract in 2030. By comparison, other big oil plays at the time — like those in Saudi Arabia or Kuwait, for example — would generate investment returns of around a third of those available in Iraq. Across OPEC states more broadly, investors were looking at risk-adjusted returns of around 11%. That said, persistent political interference on the development crimped significant production gains, and output at Rumaila has broadly hovered between 1.4-1.5 million bpd for years, although this has recently been seen to edge under the 1.4 million bpd level, due to falling pressure in the wells.
The key problem here was the lack of progress for years in meaningfully advancing the system that had been designed specifically to maintain this pressure across all key Iraq sites — the Common Seawater Supply Project (CSSP), as analysed in full in my latest book on the new global oil market order. This involves taking seawater from the Persian Gulf and transporting it to oil production facilities to boost pressure at key oil reservoirs. For some time, Rumaila was able to benefit from the fact that its main reservoir formation (at least its southern part) connects to a very large natural aquifer that helped to push the oil out of the reservoir. Indeed, it was able to produce more than 25% of its oil in place before water injection was required, as opposed to Kirkuk, whose reservoir pressure dropped significantly after output of only around 5% of the oil in place. Although the water requirements for most of Iraq’s oilfields fall between these two cases, the needs for oilfield injection are highest in the south of the country, where water resources are also the least available, according to the International Energy Agency (IEA). To reach and then sustain Iraq’s future crude oil production targets over any meaningful period, the country will have total water injection needs equating to around 2% of the combined average flows of the Tigris and Euphrates rivers or 6% of their combined flow during the low season. These demands might not appear too onerous, but these water sources will also have to continue to satisfy other, much larger, end-use sectors, including agriculture.
However, one of the French energy giant TotalEnergies’ US$27 billion four-pronged programme for Iraq is the CSSP. The first phase of this is being on the coast near the town of Um Qasr and is set to process and transport 5 million barrels of seawater per day to the main oil fields in southern Iraq, according to the French firm. Treated seawater will replace freshwater withdrawals from the Tigris, Euphrates, and aquifers to maintain pressure in the oil wells, freeing up to 250,000 cubic metres per day of freshwater for irrigation and local agriculture needs in the water-stressed region. The full completion of this project alone should allow Iraq to massively increase its oil production, not just in Rumaila’s case to the original output envisaged by the IEA, but across all of Iraq’s other major oil sites. Indeed, the CSSP was directly referenced in a confidential report (the ‘Integrated National Energy Strategy’) sent to then-Iraq Prime Minister Nouri al-Maliki back in 2012, as also examined in full in my latest book on the new global oil market order. This showed precisely how Iraq could increase its oil output from just over 3 million bpd at that point to a plateau of 13 million bpd in the ‘High Production’ scenario by 2017. The ‘Medium Production’ scenario plotted a course to a 9 million bpd plateau by 2020, while the ‘Low Production’ scenario planned for 6 million bpd by 2025. The key to achieving this was identified as a fully functioning CSSP.
Another part of the TotalEnergies project is decreasing the amount of flaring of gas produced as a by-product of oil drilling across Iraq’s oil fields. In Rumaila’s case, though, the groundwork had already been well laid by efforts through its various operating partners. The Basra Energy Company (BEC) was established by BP and PetroChina to manage the Rumaila oil field, replacing the former operator (ROO) in 2022. Meanwhile, the Basrah Gas Company (BGC) — a joint venture established in 2013 between South Gas Company (51%), Shell (44%), and Mitsubishi (5%) — gathers and processes flared gas from Rumaila, and also the West Qurna 1, and Zubair oil fields. In this context more broadly, Baghdad committed in 2017 to the United Nations and World Bank ‘Zero Routine Flaring’ initiative, aimed at ending gas flaring by 2030. At the time, the country flared the second largest quantity of gas in the world (after Russia) – some 17.37 billion cubic metres (bcm). Despite this, Iraq remained in second place for flaring — after Russia — for years, which became a major point of contention between it and the U.S. Washington rightly believed that the failure to utilise this gas for its own power production made Iraq even more dependent on neighbouring Iran for gas and electricity imports, which perennially averaged 40% of the country’s total power requirements. This, in turn, allowed Tehran further leverage over Baghdad, which it used to pass off its own sanctioned oil as non-sanctioned Iraqi oil, so by passing sanctions, as also detailed in full in my latest book.
That said, recent reports suggest a major reduction in the past six years on the sites managed by the BGC, with continued progress noted by Iraq’s Oil Ministry in recent inspections of the Rumaila site. The latest inspection occurred just over a week ago, by Undersecretary for Upstream Affairs Bassem, Mohammed Khudair, including the Qurainat crude oil processing facility and degassing station on the Rumaila site. This project is expected to significantly reduce gas flaring and is scheduled for completion in the first quarter of this year. The Oil Ministry stated that so far, gas flaring at Rumaila had been reduced 80% compared with 2019. Meanwhile, the first phase of Rumaila’s water injection project began last year, with the second phase scheduled to come online by the end of 2027. Its total capacity is 1.5 million barrels of water per day across five phases. These developments suggest that Rumaila may finally be turning a corner, with long-delayed infrastructure now beginning to take shape. Yet Iraq’s energy sector has a long history of promising breakthroughs that falter under political pressure, institutional inertia, or sudden shifts in security dynamics. For all the progress on the ground, nothing in Iraq is guaranteed until it is fully delivered — and Rumaila’s future will be no exception.
