Russia’s LUKoil has said it has cut its oil production plan in Iraq by almost a third, in line with the local government’s plans to increase the lifetime of its oilfields, reports Al Arabiya.
Andrei Kuzyayev, head of LUKoil Overseas, told Russian state TV channel Rossiya-24 that LUKoil is now looking for peak production at the West Qurna-2 oilfield of 1.2 million bpd, not 1.8 million bpd as previously envisaged.
He said the Iraqi government has decided to cut peak oil production in order to prop up oil prices and help its economy.
“That’s why Iraq’s leadership has decided to limit production in the whole country to 9 million bpd, not 12 million bpd,” he said.
“The Iraqis have analyzed the situation for the last three years, and they come to the conclusion they didn't need (sharp rises in) peak production,” Kuzyayev added. “That’s because the peak production will lead to creation of excessive infrastructure. And going forward, when production will start to sharply decline that would create an unstable macroeconomic situation in Iraq.
Iraq has signed a series of contracts with foreign companies that target total oil production capacity of 12 million bpd by 2017, but has been reviewing the target.
“In return (for cuts) we got a substantial increase in the lifetime of the plateau production. The plateau output has been envisaged to last 12-13 years, while now it has been revised to 19 years,” Kuzyayev said.
Any deep cut to Iraq’s overall target could mean the deals could need to be adjusted to accommodate lower production plateaus, or peak output levels, which would mean lower returns for oil companies in the short term.
(Sources: Al Arabiya, Aswat al Iraq)