Iraq Is Committed to OPEC+ Cuts but Has ‘Difficulties’ Complying

(Bloomberg) -- Iraq is committed to curbing its oil output in compliance with the OPEC+ agreement, but persistent divisions with the regional Kurdish administration over exports are making this difficult.

While Iraq and the autonomous Kurdish region are cooperating on exports of oil produced at Kurdish fields, “we still have issues,” Oil Minister Thamir Ghadhban told delegates at the World Energy Congress in Abu Dhabi on Tuesday.

Iraq, including the self-ruling Kurdish region, has about 5 million barrels a day of oil output capacity. Last month, its production increased by about 30,000 barrels a day to 4.78 million barrels a day, according to a Bloomberg survey. Ghadhban said on Monday that Iraq increased output over the summer to meet seasonal demand for power.

Crude production across the entire Organization of Petroleum Exporting Countries group rose by 200,000 barrels a day in August. It was the first increase since the cartel and its allies started a new round of output cutbacks at the start of 2019. Iraq is OPEC’s second-biggest producer.

The Iraqi central government in Baghdad is “relaxing” development of major oil fields, including West Qurna 2, Rumaila and Zubair, to help meet its pledged OPEC+ output cuts, Ghadhban said. He added that Iraq will cut production from fields that the government runs and not from those where foreign companies are working. He has also ordered a decrease in the country’s oil exports.

Current talks on the sharing of oil revenue between Baghdad and the Kurdistan Regional Government will succeed where previous attempts failed “because people have got wiser,” Ghadhban said.

Kurdistan pumped and exported crude on its own without cooperating with Baghdad “and what they ended up with was a hefty debt,” he said.

The country is in no rush to develop oil and gas fields that are located near its international borders, Ghadhban said earlier in an interview on the sidelines of the congress. Iraq selected companies to develop the fields in a licensing round last year, but the contracts weren’t ratified by Iraq authorities when a new administration took over and remain in limbo.

“We are still committed to developing the border fields, but we will do it at the right time,” he said in the interview. “We have enough capacity right now.”

Iraq also plans to diversify its oil-export routes, including building a pipeline from Basra to Aqaba to Jordan. The country also aims to replace a war-damaged crude pipeline running from its northern fields to Turkey.

To contact the reporters on this story: Verity Ratcliffe in Dubai at vratcliffe1@bloomberg.net;Salma El Wardany in Cairo at selwardany@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Helen Robertson, Bruce Stanley

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