Komar University of Science and Technology

Course Title: Mutlinational Energy Env. Ethics and Tech.

Date: October 8, 2017

Assignment One

Prepared by:
Bilal Bakr
Instructor:
Mr. Muhammad Ali
 Table of contents

Subject Page

Table of contents 1

Introduction 2

1. What is the total oil and gas production in world 2

2. What is OPEC? Discuss the role of OPEC and non OPEC in oil price? 3

3. Since 2014 oil price has decreased from $100 to as $56.79 3

3.1 Chinese Economy 3

3.2 Shale oil production in United States and Canada 3

3.3 Security issues in Libya, Iraq, Kurdistan, and Yemen 3

3.4 Iran Sanctions 3

4. Discuss the role of oil economy in Kurdistan Region 3

5. Conclusion 4
References 5

1
Introduction

At the beginning of life, we are as humanity; use a lot of types of energy for different purposes. The
most basic types of these energies are petrol and its types. It defined as a material occurring naturally in
the beneath of the earth and the depth is between 6000 ft to 12000 ft. So to reach the reservoir fluids, oil
companies spend a lot of money to drill the earth then to produce the crude oil. It means that the price of
the oil is very expensive. And the rate of oil production can affect the price of the oil so big countries which
have a huge amount of oil reservoirs established an OPEC around five centuries ago. The purpose of the
OPEC is to stabilize the oil price between suppliers and consumers demand. On the other hand, the shale
oil production has a great effect on the oil price because huge amount of the shale oil is discovered in the
United States and Canada. Also, the war crises have the effect on the oil price in the Libya, Iraq, and Yemen
Because the ISIS sells the produced oil illegally. Indeed, the economy of Kurdistan Region mostly depends
on the oil production as the oil price declines the economic crises has appeared in the Kurdistan Region. So
we should find a solution for these crises.

1. What is the total oil and gas production in world and write top 5 oil producing countries?

The total oil and gas production in the world in 2016 was around 100 million barrel per day of oil and 5
million cubic meter per day of gas , nearly 70% of the oil and gas produced in the top ten countries which
are (Russia, Saudi Arabia, United States, Iraq, Iran, China, Canada, United Arab Emirates, Kuwait, and
Brazil). And the half of the production is produced by the OPEC members. For several years, Russia is the
first top five countries in the oil production which produced 10.55 million barrel per day. The second
country is the Saudi Arabia that produced around 10.46 million barrel per day. The third country is the
United States which can produce more than 9 million barrel per day. The fourth country is Iraq also Iraq
can produce more than 4.5 million barrel per day. The fifth country is Iran which has a capacity to produce
around 4 million barrel per day.

2. What is OPEC? Discuss the role of OPEC and non OPEC in oil price?

The Organization of Petroleum Exporting Countries established almost five centuries ago. The
Organization of the Petroleum Exporting Countries was established in 1960, it consists of 14 nation
members as of 2017. The reason to create such an organization was to make sure the member countries
cooperate and coordinate the petroleum policies together. These main policies are the price of oil remains
stable in the global petroleum market and to safeguard income for countries that produce and export
petroleum to global market. These principles were reaffirmed by the members of the OPEC in their recent
171st Meeting of the Conference of the OPEC which was held in Vienna, Austria (Abdul-Hamid and Bayer,
2016). The countries that are a member of OPEC share a common interest. They all want oil price to stay
stable, not too cheap or too expensive, in other words, the price of todays oil that plays between 50 to 60
US dollars. OPEC countries reduced production of oil by around one million barrels a day to keep the
demand and supply closely balanced. This decrease in the oil production resulted in an increase in the price
of oil price. Many non-OPEC countries have regularly attended many OPEC ministerial meetings since its
inception. This cooperation helps as informal mechanism for the OPEC and non-OPEC producers to
coordinate policies in stabilizing the global oil market.

2
3. Since 2014 oil price has decreased from $100 to as $56.79 for Brent Crude as per 30th September 2017

China holds more than 24.5 billion barrels of proved oil reserves, which is the largest in the Asia-Pacific
region and China was a net exporter of oil till early 1990. Indeed, China exceeded the United States to grow
into the worlds highest net importer of petroleum and other liquids in 2013. China produced nearly 4.6
million barrels per day of petroleum and other liquids in 2014. Over the later of 2015, China has expressly
progressed to a service-driven economy, utilizing a less-energy intensive approach to growing. So if China
does not buy a huge amount of oil, the price continuously fall down because the produced oil has become
more in the world.

The term of shale oil basically refers to the sedimentary rock which includes kerogen. It releases as
petroleum-like liquids while the temperature of the rock is increased in the chemical process of pyrolysis.
Also, producing oil from oil shale is more complicated than conventional oil wells because the oil shale is in
the solid state so first, it needs to heat to a high temperature to change to the liquid state. The shale
formation is characterized by very low porosity and permeability so it is very complex to extract oil from it
naturally. The first time shale oil is found in the Green River Formation in the United States and the oil
resource in place is around 1.2 to 1.8 trillion barrels. Indeed, more than 800 billion barrels of the resource
is recoverable. After that more than three other huge shale formations were found in the United States for
the past few years. On the other hand, the first shale gas production was found from the Horn River Basin
in 2006 in Canada. They have a great effect on the oil price because the United States and Canada are two
of the most importer countries around the world. By finding the shale oil production, these two countries
became to the famous countries as they have a huge proven amount of oil reserves.

Security issues in Libya, Iraq, Kurdistan, and Yemen is another factor that has an effect on the oil price in
2014 and later on. As ISIS controls large area in these countries and many oil wells are located in these
areas under ISIS control. In addition, oil price has dropped considerably in last few years from over 100 US
dollars because ISIS sold the oil illegally by the cheapest price around the world. As a result, the economy
and security issues have suffered a lot and national budget income decreased and its national foreign
money reserve decreased too. So the oil price was decreased from $100 to as $56.79 and less.

Iran, since being released early this year from sanctions imposed by the United States, Europe, and
other countries because of its nuclear development program, has had a strong desire to increase its crude
oil output. It seems the agreement was hammered out because Saudi Arabia conceded to a huge
production cut while allowing Iran to increase its output by a certain amount.

4. Discuss the role of oil economy in Kurdistan Region, How the low oil prices has affected the growth of
economy in Kurdistan.

As it is clear to all that, Kurdistan region is mostly depends on the oil production. While the oil price
fell down in 2014 and later, the economic crises appeared in the Kurdistan Region. Kurdistan Region of Iraq
has started to export its oil in 2014, currently exports over 500,000 barrels per day, in addition to 200,000
barrels it consumes in the internal market. This is without doubt affects the international market and over
supply of oil Kurdistan Region begun to sell its oil independently after the Iraqi government sanctioned
Kurdistan Region financially. Even the price of oil was too low compared to before 2014. The economy of
the KRG has been hit as the oil price decrease, so most of the projects were stop and the government
could not able to pay civil servant salaries.

3
5. Conclude the future of petrodollar in your views based on your research. ( Conclusion)

In conclusion, as it is known to all that, the ISIS problem is nearly finished and all the area return to
under control. So it is the time to stabilize the oil price around the world. It is important to remember that
global oil market cannot be stabilized by OPEC members only. In addition, supply and demand balance, fair
oil price and fair returns to investors are necessary. OPEC and non-OPEC producer countries must
collaborate and cooperate together so that they can stabilize the global oil market and get fair returns for
their investors. Also, the Iraqi government and KRG must think about decrease the dependency of the oil
price and they should develop other sectors to increase the incomes of the country.

4
References
Abdul-Hamid, O. S., & Bayer, C. (2016). OPEC Annual Statistical Bulletin. Vienna, Austria.

http://www.opec.org/opec_web/en/about_us/24.htm

http://www.investopedia.com/terms/e/exploration-production-company.asp