Iraq will immediately comply with Opec production cuts after months of overproduction, its oil minister told CNBC Tuesday.
The second-largest crude producer in the 14-member cartel is known to chronically overproduce even as the group tries to curb output to help prop up prices, Kallanish energy reports.
In August, Baghdad reported its highest oil production on record, at 4.6 million barrels per day (Mmbpd), a volume that’s increased steadily over the past few years despite nearly two decades of war and a three-year battle to drive out the so-called Islamic State (IS).
“We are trying to adhere to our commitment that we have agreed on the third of December last year with our colleagues in Opec and outside Opec (collectively known as Opec+), but with difficulties, of course,” Iraqi oil minister Thamer Ghadhban told CNBC at the 24th annual World Energy Congress in Abu Dhabi.
“Right away from now, from this month, we will go back to normal and … crude oil for power generation will be down to about 80,000, 85,000 (Bpd) instead of 205,000 Bpd,” the minister said.
In recent weeks, Iraq has had to refine some 200,000 Bpd of crude for local power generation, Ghadhban said, compared to winter domestic demand of roughly 75,000 Bpd.
The Arab country, home to 12% of the world’s proven oil reserves, has seen improved output, primarily from its southern oilfields thanks to partnerships with international oil companies.
Its Majnoon field in Basra saw production double to 200,000 Bpd in June after having been cut at the beginning of the year due to its Opec quota.
Iraq is on track to produce nearly six Mmbpd by 2030, according to an April report by the International Energy Agency, which would make it the third biggest oil supplier in the world.
The country’s output five years ago was 2.96 Mmbpd, and between the 2003 U.S. invasion of Iraq and 2010, it ranged from between less than 500,000 Bpd to touching 2.5 Mmbpd, CNBC reported.
Iraq actively sought an exemption from OPEC’s production-cutting program in November 2016, because of its revenue needs (90% of the country’s revenue comes from oil sales) amid severe economic and security challenges.
This post appeared first on Kallanish Energy News.