Baghdad, 07 May 2010 – Reuters
Iraq sees no need to even discuss an Opec quota until its output reaches 4 million barrels per day (bpd) so any talk of a specific limit before then is premature, the country’s oil minister said.
Iraq has agreed deals that would boost output to over 12 million bpd in seven years from around 2.5 million bpd now. Unless global demand grows rapidly, Opec is unlikely to sit back and let Iraq increase output at will. Tough negotiations are expected with Baghdad on a level for eventual output curbs.
“Before Iraq reaches 4 million bpd it is not even necessary to discuss mechanisms to specify a quota,” Oil Minister Hussain Al-Shahristani told Reuters. “After Iraq reaches 4 million bpd, we will start to discuss the mechanism to assigning quotas. We aren’t talking about any number in the meantime.”
Iraq could reach 4 million bpd in two to three years, Al-Shahristani said. Output in April stood at around 2.28 million bpd, according to a Reuters survey.
The service contracts Iraq has signed with some of the world’s largest oil firms encourage quick gains in output.
Payment for investments made is not triggered until those gains are made.
Iraq is the only one of Opec’s 12 members without an output target as it rebuilds its shattered economy after years of war and sanctions.
Opec output targets have previously been set based on oil reserves. Iraq’s reserves are just below Iran’s, and Tehran has an output target of 3.34 million bpd.
Iraq strengthened its hands for any future negotiations when it agreed the deals that would increase its capacity to around three times that of Iran.
If Iraq were to build facilities to produce 12 million bpd, it would be second only to Saudi Arabia’s capacity now of 12.5 million bpd.