Oil upstream development: The feasibility of a fast-tempo, big-push strategy

Since 2003 the development of the Iraqi petroleum sector has witnessed unprecedented openness for foreign direct investment (FDI). This includes, to one degree or another, all petroleum sub-sectors: upstream (exploration, development and production), midstream (storage, pipeline and export outlets) and downstream (refining and gas processing). Such openness was encouraged by certain provisions and orientations of the current 2005 Constitution, enacted by executive procedures and legal frameworks and governed by contracts and agreements. To develop the upstream sub-sector Iraq pursued a big-push strategy, and within a relatively short period of time stretching between November 2008 and May 2010 the Ministry of Oil (MoO) signed twelve long-term technical service contracts (LTTSCs) with a variety of international oil companies (IOCs) aimed at increasing current production capacity by many folds. However, upstream development, and indeed petroleum policy at large, faces broad sets of formidable constraints, among which are the most effective determinants that could have far-reaching impacts. These include structural, geopolitical, international and internal factors. But most fundamentally, the majority of the prominent oil analysts, professionals and industry experts question the achievability, sustainability and indeed the desirability of the proposed expansion of Iraq's production capacity. While recognizing Iraq's needs to finance the reconstruction of its shattered economy as significant, justifiable and above all legitimate, nevertheless, this article argues that the adopted big-push strategy could very well turn out to be damaging, costly and contrary to Iraqi interests and national security.