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[size=36]Iraq is facing difficulties in reducing oil production by one million barrels per day[/size]
Economy | 09:12 - 01/05/2020
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, sources in the sector told Reuters, Friday, that Iraq will face difficulties to reduce oil production by a record rate of one million barrels per day, or 23 percent, as of May within the framework of OPEC agreement with Russia and other producers, and that Baghdad has not yet reached an agreement with companies Global oil on places of cuts.
Major oil companies such as BP, Exxon Mobil, Lukoil and Eni are producing the lion's share of Iraqi production and have so far rejected calls for reductions, prompting Iraqi officials to review options such as asking companies to advance maintenance of fields.
A less than full commitment to Iraq would potentially harm OPEC + efforts to curb supplies of up to 9.7 million bpd to support oil prices that collapsed alongside fuel demand during the Corona virus outbreak.
A senior official of the Basra Oil Company involved in the negotiations said: "Talks with foreign companies are still ongoing and we are seeking to reach an agreement to reduce production without any financial burden on Iraq."
"The talks focus on the amount of crude that each company must cut and the timetable," the senior official said.
BP, Exxon Mobil, Lukoil and Eni declined to comment.
"We will set a timetable that will allow companies to carry out scheduled maintenance of oil fields during times of production cuts," the official said.
Two officials at Basra Petroleum Company said, "Iraq received positive responses from at least two international oil companies operating in Basra regarding production cut agreements and a proposal to carry out regular maintenance work during the restriction. They did not give further details."
Officials say, "The Ministry of Oil directed the Basra Petroleum Company to reduce no less than 700,000 barrels of its oil fields, including those operated by national oil companies in Iraq. It is not yet clear how to distribute the reduction share among foreign companies."
Officials say that "the rest of the planned reduction may come from oil fields in other southern governorates in Maysan and Nasiriyah."
International oil companies operate in oil fields in southern Iraq under service contracts that pay them fixed fees in dollars for the quantities produced. Baghdad also compensates companies for the cost of building projects and approves field development plans.
"One of the options on the table is for international companies to be asked to cut production alternately to ensure that all contractors must contribute to the cuts," said a senior manager at the Basra Oil Company overseeing the operations of foreign companies in the south.
"Most of Iraq’s production comes from the fields of foreign companies and we need their cooperation to help comply with the OPEC cut agreement," he added.
The Organization of Petroleum Exporting Countries (OPEC), Russia and other major oil producers in OPEC + agreed this month to cut their combined production by 9.7 million barrels per day in May and June to support the oil market. And Iraq should reduce production by 1.061 million barrels per day.
Officials say that the bulk of the targeted reduction will come from the southern Basra fields that are developed by foreign companies, including Rumaila, which is operated by BP and produces about 1.45 million barrels per day, and West Qurna-1 field operated by Exxon Mobil and produces more than 450 thousand barrels Daily.
The targeted fields include the West Qurna-2 field, which is managed by the Russian company Lukoil and produces about 400 thousand barrels per day, and the Zubair field, which produces 250 thousand barrels per day and is managed by Eni.
Basra oil officials said it would be difficult to achieve further production cuts from the small fields operated by Basra Oil Company teams that were targeted last year by a production cut under a previous OPEC + agreement.
The production of Nahr Bin Omar field is 20 thousand barrels per day, and the combined production from the Tuba, Lahis and Artawi fields reaches 15 thousand barrels per day.
"We cannot make another reduction in oil production anymore from these small fields," said a director of Basra Petroleum Company, who oversees operations in the fields that the state is developing.
Oil officials say they do not expect any reduction of about 320 thousand barrels per day of crude produced from the Kirkuk fields in the north of the country, because most of its production is used to feed small local refineries in the north.
"We are still exchanging correspondence with foreign contractors and we need more time to settle production cut issues," said an Basra Petroleum Company official.
, sources in the sector told Reuters, Friday, that Iraq will face difficulties to reduce oil production by a record rate of one million barrels per day, or 23 percent, as of May within the framework of OPEC agreement with Russia and other producers, and that Baghdad has not yet reached an agreement with companies Global oil on places of cuts.
Major oil companies such as BP, Exxon Mobil, Lukoil and Eni are producing the lion's share of Iraqi production and have so far rejected calls for reductions, prompting Iraqi officials to review options such as asking companies to advance maintenance of fields.
A less than full commitment to Iraq would potentially harm OPEC + efforts to curb supplies of up to 9.7 million bpd to support oil prices that collapsed alongside fuel demand during the Corona virus outbreak.
A senior official of the Basra Oil Company involved in the negotiations said: "Talks with foreign companies are still ongoing and we are seeking to reach an agreement to reduce production without any financial burden on Iraq."
"The talks focus on the amount of crude that each company must cut and the timetable," the senior official said.
BP, Exxon Mobil, Lukoil and Eni declined to comment.
"We will set a timetable that will allow companies to carry out scheduled maintenance of oil fields during times of production cuts," the official said.
Two officials at Basra Petroleum Company said, "Iraq received positive responses from at least two international oil companies operating in Basra regarding production cut agreements and a proposal to carry out regular maintenance work during the restriction. They did not give further details."
Officials say, "The Ministry of Oil directed the Basra Petroleum Company to reduce no less than 700,000 barrels of its oil fields, including those operated by national oil companies in Iraq. It is not yet clear how to distribute the reduction share among foreign companies."
Officials say that "the rest of the planned reduction may come from oil fields in other southern governorates in Maysan and Nasiriyah."
International oil companies operate in oil fields in southern Iraq under service contracts that pay them fixed fees in dollars for the quantities produced. Baghdad also compensates companies for the cost of building projects and approves field development plans.
"One of the options on the table is for international companies to be asked to cut production alternately to ensure that all contractors must contribute to the cuts," said a senior manager at the Basra Oil Company overseeing the operations of foreign companies in the south.
"Most of Iraq’s production comes from the fields of foreign companies and we need their cooperation to help comply with the OPEC cut agreement," he added.
The Organization of Petroleum Exporting Countries (OPEC), Russia and other major oil producers in OPEC + agreed this month to cut their combined production by 9.7 million barrels per day in May and June to support the oil market. And Iraq should reduce production by 1.061 million barrels per day.
Officials say that the bulk of the targeted reduction will come from the southern Basra fields that are developed by foreign companies, including Rumaila, which is operated by BP and produces about 1.45 million barrels per day, and West Qurna-1 field operated by Exxon Mobil and produces more than 450 thousand barrels Daily.
The targeted fields include the West Qurna-2 field, which is managed by the Russian company Lukoil and produces about 400 thousand barrels per day, and the Zubair field, which produces 250 thousand barrels per day and is managed by Eni.
Basra oil officials said it would be difficult to achieve further production cuts from the small fields operated by Basra Oil Company teams that were targeted last year by a production cut under a previous OPEC + agreement.
The production of Nahr Bin Omar field is 20 thousand barrels per day, and the combined production from the Tuba, Lahis and Artawi fields reaches 15 thousand barrels per day.
"We cannot make another reduction in oil production anymore from these small fields," said a director of Basra Petroleum Company, who oversees operations in the fields that the state is developing.
Oil officials say they do not expect any reduction of about 320 thousand barrels per day of crude produced from the Kirkuk fields in the north of the country, because most of its production is used to feed small local refineries in the north.
"We are still exchanging correspondence with foreign contractors and we need more time to settle production cut issues," said an Basra Petroleum Company official.
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