Baghdad to boost crude oil production by year-end

BAGHDAD: Iraqi Prime Minister Haider Al-Abadi speaks during the Iraq Energy Forum at Al-Rashid Hotel in the capital Baghdad yesterday. Leaders and the ministers of oil and electricity met to discuss Iraq’s energy sector at the forum. —AFP

BAGHDAD: Iraq has assured OPEC it will fully comply with an agreement to cut oil supply in order to bolster crude prices, OPEC Secretary General Mohammed Barkindo said yesterday in Baghdad. Barkindo told reporters that OPEC members would consider whether to extend the production decrease agreement at a meeting next month. The deal propped up the crude price to around $50 per barrel. Iraq holds the world's fourth-largest oil reserves. This year, it added 10 billion barrels, bringing its total reserves up to 153.1 billion barrels.

Iraq's compliance stands now at 98 percent, the nation's Oil Minister Jabar Al-Luaibi told reporters, after addressing a conference in the Iraqi capital, also attended by Barkindo.

Compliance with the deal agreed by OPEC and non-OPEC producers at the end of last year to cut supply is "encouraging," Barkindo told the forum. General compliance with supply cuts by the oil producers was 86 percent in January and 94 percent in February, he added.

The market is already balancing, Barkindo said, adding stocks of crude were coming down. Luaibi said he was satisfied with the existing deal, but declined to say whether Iraq would support an extension, leaving it to an OPEC ministerial meeting planned in May. The current deal, he said, "contains many positive elements and achieved a lot of targets; work is ongoing to reach the reduction of 1.8" million barrels per day (bpd) agreed by OPEC and 11 other nations including Russia for their combined production in the first half of 2017.

The accord has lifted crude to about $50 a barrel. But the price gain has also encouraged US shale oil producers, which are not part of the pact, to boost output.   While Iraq is committed to achieving 100 percent of its target reduction, it will proceed with projects to boost oil production capacity to 5 million barrels per day before the end of the year, Luaibi said.

OPEC's second-largest producer, after Saudi Arabia, Iraq will proceed in parallel with exploration plans to increase its reserves by 15 billion barrels in 2018, to reach 178 billion barrels, he said.

Among the plans to increase output capacity from existing fields is a sea water injection plan which is in process of being tendered, he added. Iraq's oil production has averaged 4.464 million barrels per day (bpd) so far in March, a reduction of more than 300,000 bpd on levels before OPEC cuts were implemented from Jan. 1, state-oil marketer SOMO said on Thursday.

Average crude exports were 3.756 million bpd in March, versus a record of more than 4 million bpd in November, according to SOMO. Most of Iraq's crude is exported from southern ports, the region where it is produced. Exports from the south averaged 3.2 million bpd in March, Luaibi said.

Constructive meeting

Barkindo described as "very constructive" meetings he had on Saturday with Prime Minister Haider Al-Abadi and other Iraqi leaders in Baghdad. Iraq's natural gas output will triple to 1,700 million cubic feet per day (cfd) by 2018, as it implements projects to reduce flaring, Luaibi told the conference.

The minister said yesterday that his country plans to increase daily crude oil production to 5 million barrels by the end of this year, up from the current rate of about 4.4 million barrels per day, to secure sorely needed cash for its ailing economy.

Iraq, where oil revenues make up nearly 95 percent of the budget, has been reeling under an economic crisis since 2014, when oil prices began their descent from a high of above $100 a barrel. The Islamic State group's onslaught, starting in 2014, has exacerbated the situation - forcing Iraq to divert much of its resources to a long and costly war.

Addressing an energy conference in Baghdad, Oil Minister Jabar Ali Al-Luaibi didn't give details on which of the country's oil fields would supply the increased output.

Late last year, Iraq joined a deal by OPEC and non-OPEC members to lower production for six months by 1.8 million barrels a day in order to prop up global oil prices. The mutual production decrease began on Jan 1. Iraq's share in the deal is to reduce output by 210,000 barrels a day to 4.351 million barrels.

"There are positive elements in that deal and we achieved a lot of its targets," Al-Luaibi told reporters on the sideline of the conference. "Work and cooperation are underway ... to reach the 1.8 (million barrels a day) reduction," he added, without divulging whether Iraq is going to support an extension to that deal.-Agencies