Iraq Oil and Gas Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Iraq Oil and Gas Market Trends

Infrastructure Development and Modernization Initiatives

The Iraqi oil and gas sector is witnessing substantial infrastructure modernization efforts through significant investments in critical projects. A prime example is the USD 121 million engineering contract awarded to China Petroleum Engineering & Construction Corp (CPECC) for modernizing gas extraction facilities at the West Qurna oilfield. This modernization drive extends to the export infrastructure, with BP PLC and Eni SPA undertaking a USD 400 million project to construct two seabed oil and gas pipelines for southern exports through the Gulf, including the replacement of aging pipeline infrastructure connecting to the Khor al-Amaya terminal.

The country's commitment to infrastructure development is further evidenced by extensive storage capacity expansion projects at strategic locations including Fao, Zubair, and Tuba. These developments are complemented by the construction of new facilities such as the Karbala refinery, which will add 150,000 barrels per day to Iraq's refining capacity. The modernization of existing facilities and construction of new infrastructure is creating a robust foundation for sustained growth in Iraq's oil and gas sector, enabling more efficient production, transportation, and storage capabilities.

Expanding Production Capacity and Resource Development

Iraq's oil and gas sector is driven by the continuous development of its vast hydrocarbon resources, particularly through major projects like the Rumaila oilfield, which contains approximately 18 billion barrels of petroleum reserves. The field's current oil production capacity of 1.1 million barrels per day, managed by a consortium including BP, China National Petroleum Corporation, and Iraqi state-owned SOMO, demonstrates the country's ability to effectively develop its resources. This expansion in oil production capacity is supported by the development of multiple new upstream oil and gas projects and the rehabilitation of existing facilities.

The natural gas sector has shown remarkable growth, with gas production increasing by 28.4% from 8.7 million tons of oil equivalent in 2017 to 11.2 million tons in 2018. This substantial increase is attributed to strategic investments in gas field development and infrastructure improvements. The expansion of natural gas production capacity is further supported by projects like the Basrah Gas Company joint venture, which aims to capture and process associated gas from major southern oil fields, reducing flaring and maximizing resource utilization.

Growing Investment in Downstream Integration

Iraq's downstream oil and gas sector is experiencing significant growth driven by substantial investments in refining and petrochemical capabilities. The development of new refineries, including the strategic Karbala facility, represents a major push toward increasing domestic refining capacity and reducing dependence on imported petroleum products. This downstream expansion is complemented by the development of storage infrastructure, with current capacity at 12 million barrels and multiple expansion projects underway at key locations.

The petrochemical sector is witnessing renewed focus with the operation of three major facilities - Khor al-Zubair, Musayeb, and the Baiji refinery complex. These facilities, managed by Iraq's State Company for Petrochemical Industries, are being supplemented by new projects and expansion plans. The integration of downstream operations is further enhanced by the development of supporting infrastructure, including storage facilities and transportation networks, creating a more robust and efficient value chain in Iraq's oil and gas sector.

Segment Analysis: Upstream

Exploration Segment in Iraq Oil and Gas Market

The oil exploration segment represents a significant portion of Iraq's upstream oil and gas market, with extensive activities across multiple geological zones. The country has an ambitious oil exploration program with 12 exploration blocks awarded in different regions, including the Rutba-Jezira tectonic zone, western Iraq, and southwestern desert areas. These exploration blocks (Block 1-12) are currently in the construction phase, with expected production start dates in 2024-2025, demonstrating Iraq's commitment to expanding its hydrocarbon resource base. The exploration activities are primarily managed by the Ministry of Oil (Baghdad), focusing on both oil and gas resources across diverse geographical locations from the northern regions near Kirkuk to the southern areas near Basra.

Production Segment in Iraq Oil and Gas Market

The oil production segment is experiencing significant growth in Iraq's upstream oil and gas sector, driven by the rehabilitation and development of major oil fields. Key oil production projects include the Al-Ahdab field with 303 square kilometers of area, the Badra field spanning 16 km long and 6 km wide, and the massive East Baghdad field extending 65 kilometers long and 11 kilometers wide. The segment's growth is supported by technological advancements in drilling and production techniques, with major international oil companies providing technical expertise and investment. The development of these fields, along with new production facilities, is expected to significantly enhance Iraq's production capabilities through 2029.

Segment Analysis: Midstream

Transportation Segment in Iraq Oil and Gas Midstream Market

The oil and gas transportation segment dominates Iraq's midstream oil and gas market, with an extensive network of pipelines serving as the backbone of the country's hydrocarbon infrastructure. The segment encompasses over 71 major pipelines dedicated to transporting crude oil, petroleum products, natural gas, and LPG across the nation. The KRG-administered northern Iraqi oil is exported through an independent pipeline connecting the Kirkuk area fields to Turkey's Ceyhan port. In the southern region, the export infrastructure includes the 1.7 mb/d Basra Oil Terminal and a network of subsea pipelines connecting four single point mooring (SPM) systems, each with a design capacity of 900,000 b/d. The country is also diversifying its oil exports through new pipeline projects, including the Iraq-Jordan oil pipeline initiative announced in 2024, which will stretch 700 km from Rumaila to Haditha with a capacity of 2.25 million barrels per day.

Storage Segment in Iraq Oil and Gas Midstream Market

The oil and gas storage segment is experiencing rapid growth in Iraq's midstream oil and gas market, driven by ambitious expansion projects and increasing production volumes. The segment is witnessing significant development with multiple storage facility projects under construction, including the expansion of storage tank capacity at strategic locations such as Fao, Zubair, and Tuba. Major projects include the Bin Omar field Phase 2 with a capacity of 1,452,000 barrels, the Nassiriyah facility with 525,000 barrels capacity, and the Fao 2 project adding 464,000 barrels of storage capacity. The country's National Investment Commission has prioritized five strategic storage facilities, including projects in Basra Province, Mosul Province, and Saladin Province, demonstrating the government's commitment to expanding storage infrastructure to accommodate increasing production and enable grade segregation for exports.

Segment Analysis: Downstream

Refineries Segment in Iraq Oil and Gas Market

The oil refining segment dominates Iraq's downstream oil and gas market, with significant ongoing expansion and development activities across the country. The segment maintains a strong market position through its extensive network of operational facilities, including major refineries like Baiji (310,000 b/d), Basrah (310,000 b/d), and Daura (210,000 b/d). The segment is experiencing robust growth driven by several large-scale projects under construction, including the USD 6 billion Karbala refinery (150,000 b/d), USD 4 billion Basrah Refinery stage II (55,000 b/d), and the USD 6 billion al-Faw refinery (300,000 b/d). These developments are aimed at reducing Iraq's dependence on imported petroleum products and increasing domestic refining capabilities. The segment's growth is further supported by technological upgrades, such as the USD 3.7 billion Basrah Refinery Upgrading Project by JGC Holdings Corporation, which will increase gasoline and diesel fuel production upon completion in 2025.

Petrochemical Plants Segment in Iraq Oil and Gas Market

The petrochemical plants segment represents a developing component of Iraq's downstream oil and gas sector, with operations concentrated in three main facilities - Khor al-Zubair in the south, Musayeb near Baghdad, and the Baiji refinery complex in the north. The segment shows potential for expansion through projects like the Al-Faw Peninsula polypropylene production plant, which has a capacity of 650 tons per year. Despite having access to abundant gas resources rich in ethane and other compounds used as petrochemical feedstock, the segment faces challenges in attracting major investments. The segment's growth trajectory is influenced by ongoing developments in facilities like the Baiji Petrochemical complex, which produces fertilizers and chemicals with a capacity of 500 tons, representing a USD 0.5 billion investment in the sector.