Oil minister says Iraq has the capacity to increase oil production following removal of Iran sanctions waivers but remains committed to OPEC output cuts.
Baghdad – Iraq is on track to produce nearly six million barrels of crude daily by 2030, the International Energy Agency said Thursday, which would make it the world’s third biggest oil supplier.
The IEA’s wide-ranging report found that Iraq’s production in the next decade could increase by an impressive 1.3 million barrels per day to a total of 5.9 million bpd.
“Iraq is and will remain one of the key pillars of the oil market in the years to come,” IEA head Fatih Birol told reporters on Thursday.
The optimism stemmed from Iraq’s 50 percent increase in oil production since 2012, Birol said, despite several years of low prices and the devastating rampage of the Islamic State group across a third of the country.
“It shows the resilience of the Iraqi oil industry,” said the IEA’s executive director.
The agency acknowledged a range of potential roadblocks to its outlook, including global market conditions, foreign investment in Iraq, political stability and a steady supply of the water needed to actually produce oil.
Iraq is currently the fifth-largest oil producer worldwide, and the second-largest from among the Organization of the Petroleum Exporting Countries (OPEC).
Iraq has the capacity to produce 4.6 million bpd, but last month exported just under 3.4 million bpd after agreeing to trim its oil production alongside others so prices would go up.
Prices have indeed enjoyed a strong recovery, jumping even further Thursday to a nearly six-month high of $75.60.
It came amid supply concerns after the United States on Monday decided not to renew exemptions from sanctions against Iran granted last year to eight countries importing Iranian crude oil, taking a tougher line than expected and triggering a rally in oil prices on fears of oil supply shortages.
Iraqi oil minister Thamer al-Ghadban said on Thursday his country had the capacity to increase its oil production to 6 million barrels per day (bpd) if needed, but it was committed to OPEC-led output cuts and would not take unilateral action to boost supply.
He said Iraq could boost its production to meet the shortfall but would do so only in coordination with fellow OPEC members.
“Iraq does not take unilateral decisions,” said Ghadban.
“We have a huge capacity to increase, but knowing that, it is important to keep the market stable and remove the surplus of oil in the market,” he told reporters.
Ghadhban also said there were no acute oil shortages for the time being, but Iraq would continue to monitor the market to assess any need for additional barrels at the next OPEC meeting, due in June.
“We have plenty of time to assess the markets’ reaction,” Ghadhban said at a joint news conference in Baghdad with IEA head Birol.
The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, agreed to cut output by 1.2 million bpd. They will meet on June 25-26 to decide whether to extend the pact.
Ghadhban said a panel of energy ministers from major oil producers that includes Iraq, known as the JMMC, will meet on May 19 in the Saudi city of Jeddah to assess the “oil market reactions” and make recommendations before the June meeting.
Asked about the effect of US sanctions on markets, Ghadhban said there was “no need for fear and panic”.
The minister also said his country sought fair oil prices for producers, adding that he believed prices had improved.
Baghdad would meet soon with authorities from the Kurdistan Regional Government to discuss issues relating to oil exports from the semi-autonomous region, as well as the budget agreement, Ghadhban said.
“We want them (the Kurdish authorities) to hand over oil exports to SOMO (Iraq’s State Organization for Marketing of Oil)”.
Studies were being carried out to increase production capacity from the Kirkuk oilfields by 50 percent, he added.
“Production from Kirkuk oilfields is at around 400,000 barrel per day now,” said Ghadhban.
Ghadhban said Iraq would install a monitoring system on fuel trucks to check movements and prevent smuggling. The system will allow authorities to track fuel trucks around the clock, he said.