Iraq was the world’s 12th largest oil producer in 2009, and has the world’s fourth largest proven petroleum reserves after Saudi Arabia, Canada, and Iran. Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where vast reserves, proven and unknown, have barely been exploited. Iraq’s energy sector is heavily based upon oil, with approximately 94 percent of its energy needs met with petroleum. In addition, crude oil export revenues accounted for over two-thirds of GDP in 2009. Iraq’s oil sector has suffered over the past several decades from sanctions and wars, and its oil infrastructure is in need of modernization and investment. As of June 30, 2010, the United States had allocated $2.05 billion to the Iraqi oil and gas sector to begin this modernization, but ended its direct involvement as of the first quarter of 2008. According to reports by various U.S. government agencies, multilateral institutions and other international organizations, long-term Iraq reconstruction costs could reach $100 billion or higher.
The Iraq Petroleum Company (IPC), prior to 1929 named the Turkish Petroleum Company (TPC), is an oil company headquartered in London,
United Kingdom. It is jointly owned by some of the world's largest oil companies and had virtual monopoly on all oil exploration and production in Iraq from 1925 to 1961.
The Iraq Petroleum Group of associated companies was involved in other parts of the Middle East, and played a major role in the discovery and development of oil resources in the region. IPC operations were taken over by the Iraq National Oil Company after they were nationalised by the Ba’athist government in June 1972. The company "Iraq Petroleum Company" still remains extant as a name on paper and one associated company - Abu Dhabi Petroleum Company (ADPC), formerly Petroleum Development (Trucial Coast) Ltd - also continues with the original shareholding intact.
TPC obtained a concession to explore for oil in 1925, in return for a promise that the Iraqi government would receive a royalty for every ton of oil extracted, but linked to the oil companies' profits and not payable for the first 20 years. The concession required the company to select 24 rectangular plots of 8 square miles (21 km2) each for drilling operations. During the 1925/6 season, an international geological party, comprising representatives of the shareholding companies together with an American contingent, conducted a wide-ranging survey of Iraq. Two wells were selected for drilling at Pulkanah and one each at Khashm al Ahmar, Injanah and Qaiyarah. Kirkuk was included as the sixth location. The well at Baba Gurgur was located by geologist J.M. Muir just north of Kirkuk. Drilling started, and in the early hours of 14 October 1927 oil was struck. Many tons of oil were spilled before the gushing well was brought under control, and the oil field soon proved to be extensive.