Iraq con­firms oil-out­put re­duc­tion even as sched­uled ex­ports rise

The Daily Star (Lebanon) - - BUSINESS -

Iraq has re­duced its oil pro­duc­tion by 160,000 bar­rels a day and will com­ply with cuts it agreed to make un­der an OPEC out­put deal, Oil Min­is­ter Jab­bar al-Luaibi said, even as ship load­ing data sug­gested that ex­ports are set to in­crease next month.

The Arab Gulf pro­ducer is poised to ship 3.64 mil­lion bar­rels a day of crude oil in Fe­bru­ary from its ports in south­ern Basra prov­ince, ac­cord­ing to a load­ing pro­gram ob­tained by Bloomberg, more than its De­cem­ber av­er­age of 3.51 mil­lion bar­rels a day, which it­self was a record high. Iraq has pledged to re­duce its pro­duc­tion by 210,000 bar­rels a day from Oc­to­ber lev­els, un­der a Nov. 30 agree­ment by the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries.

“If it’s re­ally hap­pen­ing, it should soon be vis­i­ble via lower ex­ports” be­cause Iraq has lim­ited stor­age ca­pac­ity, Gio­vanni Staunovo, a Zurich-based an­a­lyst at UBS Switzer­land AG, said by phone. “Let’s see if it shows up.”

The ris­ing ex­ports from Basra have led some an­a­lysts and traders to ques­tion whether Iraq will com­ply fully with its promised con­tri­bu­tion to the OPEC out­put cut. The group’s sec­ond-big­gest pro­ducer was ini­tially re­luc­tant to ac­cept a quota, ask­ing first for an ex­emp­tion to help it fight Daesh (ISIS) mil­i­tants and then dis­put­ing OPEC’s ac­count­ing be­fore fi­nally agree­ing to the deal. The na­tion pumped 4.61 mil­lion bar­rels daily in De­cem­ber, data com­piled by Bloomberg show.

Iraq is cut­ting pro­duc­tion from fields op­er­ated di­rectly by the fed­eral gov­ern­ment, Luaibi said Tues­day by text mes­sage. The coun­try’s gov­ern­ment-op­er­ated fields pro­duce around 440,000 bar­rels a day, or less than 10 per­cent of Iraq’s to­tal out­put, Oil Min­istry data from Septem­ber show.

The re­main­der comes from fields op­er­ated by in­ter­na­tional com­pa­nies, whose con­tracts en­ti­tle them to com­pen­sa­tion if the gov­ern­ment or­ders them to cur­tail pro­duc­tion, and the semi-au­ton­o­mous Kur­dish re­gion, whose gov­ern­ment has not given any in­di­ca­tion that it plans to con­trib­ute to the cuts.

Iraq ex­pects to fully im­ple­ment its pledged cut of 210,000 bar­rels a day by the end of Jan­uary, Luaibi said, with­out spec­i­fy­ing ar­eas or fields where it would make the ad­di­tional de­crease be­yond the cur­rent re­duc­tion of 160,000 bar­rels a day. Phone calls to of­fi­cials at the KRG’s Nat­u­ral Re­sources Min­istry in Ir­bil were not an­swered.

Sep­a­rately, Iraq’s Oil Min­istry urged An­gola’s state oil com­pany So­nan­gol to re­sume work at two north­ern fields near Mo­sul by the end of Fe­bru­ary, the min­istry said Tues­day in a state­ment. The com­pany with­drew from the two fields, Na­jma and Qay­yarah, in 2014, un­der threat from Daesh mil­i­tants. The fields pre­vi­ously pro­duced as much as a com­bined 30,000 bar­rels a day of crude. – Bloomberg News

Iraq de­pends heav­ily on oil ex­ports for its bud­get.

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