By Simon Kent.
The director of licensing at Iraq’s Ministry of Oil, Abdul Mahdy Al-Ameedi, has written a letter to IOCs asking them for conservative spending plans for 2016 in light of the ongoing oil price rout.
The low oil prices seen since last year have limited Iraq’s ability to pay companies to meet production targets, and government revenues have fallen significantly.
Quoted in Bloomberg, Al-Ameedi described the purpose of the letter:
“We’ve asked them in a letter we sent them to take into consideration the drop in oil prices and the low revenues of the government that may not cover their investments. There was a stipulation that this investment reduction must not affect oil output from the fields that was in the 2015 schedule.”
This year has seen Iraqi oil production soar to over 4 million barrels, putting Iraq on track for its middle production scenario aimed for after the first oilfield auctions in 2009. The optimistic best scenario Iraq originally aimed for was 12 million BDP by 2018.
The price collapse has put even the middle 6 million BPD scenario in jeopardy, since major IOCs have already had their contracts renegotiated to cut production targets.