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Iraq optimistic over gradual oil price uptick

03 Jul 2017 13:49 (+01:00 GMT)
Iraq optimistic over gradual oil price uptick

London, 3 July (Argus) — Iraqi oil minister Jabbar al-Luaibi said today that he expects oil prices to recover gradually and that it is too early for Opec and its non-Opec allies to look at further action to rebalance prices.

Speaking at the Iraqi Conference for Trade and Investment (ICTI) 2017 today he said: "Let us wait for 15 July and the [Joint Ministerial Monitoring] Committee", adding that for the time being, "there is no action, everything seems to be okay. I think the [global oil] prices will go up again gradually."

His remarks echo those made recently by the oil ministers of Saudi Arabia and Kuwait. Iran's minister has also said it is too early to move towards deeper cuts but said the issue was being discussed within Opec, something al-Luaibi seemed to refute.

Brent crude has put on some $5/bl in recent days but, at around $49/bl today, it remains some $5/bl below the level just ahead of the late May meeting of Opec and non-Opec ministers.

Al-Luaibi reaffirmed Iraq's commitment to the output restraint agreement, that was extended to the end of March 2018 when the ministers met at the end of May.

Iraq is committed to trimming its production by 210,000 b/d from October 2016 levels despite al-Luaibi arguing that it should have been exempted because of the civil war with Islamist rebel group IS.

Iraq's output cuts are coming from state-owned company operated fields, rather than those run by foreign oil companies, al-Luaibi said.

The minister pegged the country's current production at 4.379mn b/d. Iraq's current exports, including volumes marketed by the semi-autonomous Kurdistan Regional Government [KRG], stand at around 3.8mn b/d, al-Luaibi estimated.

Iraq is still aiming to raise its output capacity to 5mn b/d by the end of this year, and build its oil reserves to 170bn bl over the next few years, from 153bn bl now.

"Iraq will never stop investing in [the] oil and gas sector, even if oil prices slide to a minimum level", al-Luaibi said. "The operational cost of producing a barrel of oil in Iraq is still very low", al-Luaibi said, pointing to higher comparative operating costs elsewhere, including in the US.

He also stated that the Iraqi oil ministry has launched a tender to build five refineries with a total capacity of 1.2mn-1.3mn b/d. "By the end of this year, we hope we can conclude three-four contracts [for these refineries]", al-Luaibi said.