Iraq witnessed upheaval in the summer of 2014. What was the situation like for companies operating in the country?

The situation in Iraq can be challenging for companies, especially for those who do not understand the geography and cultural challenges associated with it. During the summer of 2014, many companies were nervous about the risks involved. However, as a company primarily operating in the Basra area and with operations in the Kurdistan Region of Iraq, we did not see it as a risky endeavor because we understood the geographical risks. The press was exaggerating some of the dangers associated with the instability over the summer, and we did not perceive it as that risky. Nonetheless, we do not have a cavalier attitude towards our staff’s security, and we have a well-defined security protocol and a robust security team that covers all our operations in the Middle East and Africa.

What is the main business opportunity in Iraq at the moment?

Given the fall in oil prices, companies need to reassess how they deploy capital. The easiest gains are in brownfield work, such as optimization and debottlenecking, as well as downstream development work on oil and gas export infrastructure. The dependence on oil means that it needs to keep flowing, and many Gulf Cooperation Council (GCC) countries, including Iraq, will look to improve the performance of existing assets to facilitate increased exports with minimal capital investment. Different countries’ approaches to this will be interesting to observe. Iraq, for example, does not have the capital reserves to ride out an extended downturn. To gain the most benefit from brownfield investments, international operating companies (IOCs) look for opportunities to increase production, improve well performance, increase facility reliability, and acquire near-real-time data for prompt decision-making. For instance, gaining more accurate, real-time production information enables companies to see which wells are producing with the least amount of water so that they are not over-injecting and spending a lot of money separating a relatively low amount of oil.

Can you describe how you envision the evolution of the Iraqi oil and gas industry over the next five years?

With the assistance of the international community, Iraq’s government is expected to overcome the short-term security concerns that have been plaguing the country. By continually investing in the national government and international operating companies, we will see an increase in the levels of oil and gas production. The production goal of eight million barrels of oil per day by 2020 is an ambitious target, but the country has the capability, reserves, and determination to reach it. Over the next couple of years, we expect to see the launch of petrochemicals projects and more significant investments in power generation in Iraq, making it a promising market.

How does your company address the cyclicality of the oil and gas industry?

We have been through low-cycles in the industry before, and we are well-prepared for them. Although the duration of a downturn can be challenging, the industry always bounces back. We have maintained our business during these low-cycles by primarily operating in the southern region of Iraq, which has been relatively unaffected by the unrest seen in other parts of the country, such as Anbar Province and northern Iraq.

Can you explain what the situation was like for companies operating in Iraq during the summer of 2014?

The situation in Iraq during the summer of 2014 was challenging, particularly for those who were unfamiliar with the geography and cultural challenges associated with the country. Many companies were apprehensive during this period. However, we were less concerned as we primarily operate in the Basra area, where the risks were minimal. We also have operations in the Kurdistan Region of Iraq, with both Iraqi nationals and some expatriates on the ground to support international operating companies. We did not consider this to be a risky endeavour as we understood the geographic risks. Although the press exaggerated some of the dangers associated with the instability over the summer, we did not view it as particularly risky. Nonetheless, we take the security of our staff seriously, and we have well-defined security protocols and a strong security team that covers all of our operations in the Middle East and Africa. We require leadership approval for travel to countries deemed risky and have security controls in place for travel within Iraq. We also seek advice from third parties, such as private security contractors, to help mitigate security risks. For instance, we liaise with multinational private security contractors operating in Iraq, and we coordinate our movements and protocols with the appropriate PSC to align our security protocol with our customers.

What is currently the most significant business opportunity in Iraq?

Given the decline in oil prices, companies need to reassess their capital deployment strategies. Brownfield work, such as optimization and debottlenecking, as well as downstream development work on oil and gas export infrastructure, offer the easiest gains. Given that the country is dependent on oil, it is necessary to keep it flowing, and many GCC countries, including Iraq, will seek to improve the performance of existing assets to facilitate increased exports with minimal capital investment. The different approaches taken by various countries, such as Iraq, will be interesting to observe. For instance, Iraq does not have the capital reserves to weather an extended downturn, making it necessary to gain the most benefit from brownfield investments. International operating companies look for opportunities to increase production, improve well performance, and increase facility reliability and near-real-time data acquisition for prompt decision-making. For example, more accurate, real-time production information helps companies identify wells that produce the least amount of water, ensuring they are not over-injecting and spending a lot of money separating a relatively low amount of oil.