Iraq is an important oil producing nation in the global market with oil industry being the major contributor to GDP. In 2016, the country exported petroleum product worth USD 43.8 billion in 2016. Significant increase in exports was reported in terms of barrels of oil but increase in exports revenue was much lower due to drastic fall in oil prices in the global market. Revenue from oilfield service increased from USD ~ million in 2012 to USD ~ million in 2017. Revenue recognition was mainly done by major oilfield services companies which include Schlumberger, Halliburton, and Baker Hughes. Many Chinese companies have also made market entry in Iraq. The revenue generation was mainly attributed to increase in oil production and maintenance of wells and rigs which have already aged and need significant investment in developing the infrastructure.
Drilling industry is an integral part of petroleum sector as it serves as an important link between locating oil and gas reserves and extraction of these reserves from oil and gas fields. Drilling industry reported decline in revenue in 2015 to USD ~ million which further continued in 2016 to revenue of USD ~ million. It registered a minor recovery in 2017 with a growth of USD ~ million. Integrated oilfield services enable the oil companies to strategically mobilize drilling rigs, equipments and services and gain competitive advantage. The combination of these services results in an efficient, convenient and comfortable infrastructure. This trend has gained increasing popularity in the drilling industry in Iraq. Iraq is planning to start offshore oil and gas exploration which along with capacity addition in onshore is expected to boost oilfield services industry in future.
Oilfield Services Market Segmentation
By Region: Northern Iraq includes the oilfield in Kurdistan region and in 2017; it has been marred with conflicts from ISIS and separatists for independent Kurdistan. Oilfield services generated estimated revenue of USD ~ million in 2017. Majority of the revenue was from operation maintenance and production related services. Nearly ~ million barrel of crude was pumped every day which required continuous maintenance. Aging infrastructure for oil production was other reason for high demand of oilfield services. Southern Iraq generated estimated revenue of USD ~ million. Production related oilfield service was the highest as production was high in 2017.
Trends and Developments
Many international oil companies have presence in Iraq and many more have shown interest in developing the oil fields in Iraq. Iraq plans to oil capacity expansion by undertaking large export infrastructure projects and developing a diverse coalition government structure in order to attract major investments. Integrated oilfield services enable the oil companies to strategically mobilize drilling rigs, equipments and services and gain competitive advantage. The combination of these services results in an efficient, convenient and comfortable infrastructure.
Drilling Services Market Size
Revenue from oilfield service increased from USD ~ million in 2012 to USD ~ million in 2017. Revenue recognition was mainly done by major oilfield services companies which include Schlumberger, Halliburton, and Baker Hughes. Many Chinese companies have also made market entry in Iraq. The takeover of Mosul by Islamic State militants in June 2014 had fueled defense spending in 2013 and 2014, pinching the national budget so much that investments towards oil production are often insufficient to operate at max capacity leading to poor demand for oilfield services. The market for oilfield services registered constant increase in revenue in the period 2014-2017. The revenue generation was mainly attributed to increase in oil production and maintenance of wells and rigs which have already aged and need significant investment in developing the infrastructure.
Market Segmentation
Drilling services business in North of Iraq is limited due to problem of ISIS and separatist movement of independent Kurdistan. Even though production of oil was not halted, it declined significantly. It has been estimated that revenue from drilling new wells and providing other drilling related services generated revenue of USD ~ million (Provisional Estimates) in 2017. Southern Iraq was the major producer of oil in Iraq and accounted for majority of drilling related activity. Drilling and related services generated an estimated USD ~ million in 2017. Exxon and Shell were two major clients issuing drilling contracts in South of Iraq.
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