The Impact of European Prices and the Value of Gas Produced Consumed and Burned on the Value of Oil Revenues in Iraq For Period 1997-2023

Objectives: The research aims to investigate the significant role of natural gas in the Iraqi economy, focusing on the economic impact of burning natural gas. The study addresses the problem of underutilization of Iraq's natural gas resources, emphasizing the potential benefits of investing in Iraqi natural gas instead of burning it. The central hypothesis suggests that redirecting the use of Iraqi natural gas associated with oil toward investment, rather than burning it, could help provide large quantities of natural gas for local consumption and reduce the need for imports. This approach could also optimize the economic contribution of Iraq's natural gas reserves, which remain largely underexploited. Methods: The research uses quantitative methods to analyze the relationships between various factors, including the European gas prices, the value of gas produced, the value of gas consumed, the value of burned gas, and their effects on oil revenues. The study adopts an econometric approach, applying a standard model based on economic theory to evaluate these relationships. Data on Iraqi natural gas production, consumption, and burning practices were gathered and analyzed to estimate the economic impact of different variables on the country’s oil revenues. Results: The results of the study reveal that the relationship between the value of gas production and oil revenues, as well as the value of burned gas, aligns with the assumptions of economic theory. The price of gas in relation to European prices also shows a consistent relationship with oil revenues. Additionally, the value of gas produced, gas consumed, and gas burned significantly affects oil revenues. However, the impact of European gas prices on oil revenues was found to be weaker compared to the other variables studied. Conclusion: The research concludes that Iraq's natural gas resources have a substantial potential for contributing to the country's economic growth if they are invested in rather than burned. The findings support the hypothesis that efficient management of gas resources, with a focus on local consumption, could reduce Iraq's reliance on gas imports and enhance oil revenues. By optimizing the use of natural gas, Iraq could better harness its energy reserves, improving its overall economic stability and development.