Analysis of Iraqi Oil Production Since 1970 with Formulation of perceptions about Future Scenarios of Oil Revenue Management Dr. Ayad Ayid WALI

Abstract

The article attempts to give a clear vision about oil production in Iraq , In addition to discuss the perfect way to manage the financial returns of oil based on the experience of Norwegian and the United Arab Emirates to invest the oil money. It is clear that oil production is influenced, negatively or positively by political and economic conditions and the relationship between these two variables is direct. Whenever the country’s political and economic status is improved, will lead to increased oil production, and development includes all oil sectors. Moreover, production increase leads to more capitals and investments which contribute effectively to the economic development. On the contrary, any political, economic or martial deterioration or tension will lead to production fluctuation and stop. Therefore, all essential sectors will be paralysed including oil sector. Oil production means extracting the oil of its reservoir to the point of delivery, whether the consumer is a foreigner or a refinery.Despite the huge Iraq’s oil reserve, which is estimated by 143.100 billion barrels, its production is still low and does not exceed 3 million/day. It is the same level of production since seventies of the last century.Iraqi oil production in 2011 reach about 2.652 million barrels, it represents about 7.9 % of OPEC total production in 2011. Iraq occupied fourth place according to oil production after Saudi Arabia, Iran, Venezuela, KuwaitOil revenues represent are the basis to finance economic and social plans in these countries. It plays a major role to identify the direction and nature of development since early seventies till the present time. Oil importance, as a strategic commodity in industry because it is used in different aspects of economic, financial, bank and investment activities. Moreover, it is an important material in international trade and a main income for producing countries and in less degree for consuming countries through taxes revenues. Financial returns of export the oil in 2011 reached about 87 billion dollars it represent 60% of GDP 'Gross Domestic Product ' , but there are several elements prevent Iraq to use the oil revenue to support the economic development like corruption , security tension , wars... etc. Iraq needs to find the best way to manage the oil revenue and use it to improve the economic situation in the whole country.   Oil revenues depend on two factors: quantity of produced and exported crude oil, and percentage of government’s share from foreign companies shares and taxes in addition to crude oil prices in international market.There are several models presented for Iraq’s oil future depending on previous experience in different regions around the world. Generally, it can be limited to four models: Alaska solution, Norwegian experiment which based on funds of oil stability and saving, oil revenues under the legislative authority instead of executive authority. Finally, a fourth trend pushes towards the new law of oil and gas.