Iraq holds talks over oil targets

the country’s top energy official said.

Hussein al-Shahristani said that Iraq was re-negotiating all of the oil field contracts awarded in 2009 to lower the peak production target and spread output over a longer period of time.

He added that he hoped oil prices stayed above US$90 per barrel, after world oil prices fell sharply to around US$92 per barrel in recent days.

Iraq currently produces about 3,5 million barrels of oil per day, and had targeted the construction of infrastructure, pipelines and storage facilities that would have allowed it to pump 12 million bpd in 2017.

The revised contracts, however, would lower the country’s maximum capacity to nine million bpd.

“We have revised the production plan for all the fields,” Shahristani, the deputy prime minister responsible for energy affairs, said in an interview in his office inside Baghdad’s heavily-fortified Green Zone. “Some of them have already been agreed and finalised, and some of them are in discussion.”
Asked if that meant every contract awarded in 2009 was being revised, he replied: “Yes. That’s right.

And we may decide in certain cases that we will keep the production that was contracted for, because it will be feasible to maintain that production for a much longer time, based on our new studies.”

Though Iraq could, in that scenario, theoretically pump as much as nine million bpd, Shahristani said that between five and six million bpd “would generate enough revenues to meet our needs.”

Iraq awarded several oil fields to foreign energy firms for development in 2009, paying a per-barrel service fee, in a series of public auctions that cemented its role as a key global producer of the future.

Shahristani cited lower-than-expected forecasts for future demand as the reasoning behind Iraq’s decision.

“There doesn’t seem to be great demand in the coming few years,” the former oil minister said.

“We thought in Iraq that there is no point at this stage to invest very large sums to develop the fields for a much higher production capacity if we are not going to use that capacity and produce the oil, that we cannot market because there is not sufficient demand for it.”

The International Energy Agency last month fuelled bearish sentiment in the oil market in a report that predicted growing crude oil supply through 2013, led by North America, that would outstrip demand. — AFP.