Iraq is in talks with foreign energy firms to lower long-term oil production targets agreed several years ago because of sagging global crude demand forecasts, the country’s top energy official told AFP.
Hussein al-Shahristani said that Iraq was re-negotiating all of the oil field contracts agreed 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 $90 per barrel, after world oil prices fell sharply to around $92 per barrel in recent days.
Iraq currently produces about 3.5 million barrels of oil per day (bpd), and had targeted the construction of infrastructure, pipelines and storage facilities that would have allowed it to pump 12m 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,” al-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 finalized, 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, al-Shahristani said that between five and six million bpd “would generate enough revenues to meet our needs.”
He said that while marginal oil fields around the world required that oil prices stayed above $75 to $80 per barrel – they currently stand at around $92 for a barrel of light sweet crude – Iraq hoped they would stay above $90 per barrel.
“Our budget is based on $90,” al-Shahristani, a former oil minister, said. “We wish that the oil price will remain at the level above $90. Otherwise we have to revise our budget. We don’t expect it to fall below $90.”
Iraq, which is almost entirely dependent on oil sales for its income, currently exports about 2.6m bpd. It is hoping to increase sales sharply in the coming years in order to fund much-needed reconstruction of the country’s dilapidated infrastructure and conflict-battered economy.