Iraq hopes to boost energy ties with the US

Baghdad hopes to strengthen cooperation with the US on oil and other energy issues, Iraqi prime minister Haider al-Abadi said in Washington.

But President Donald Trump's administration for now plans to prioritize joint efforts to defeat Islamist group Isis. Washington is also pushing the Iraqi central government to balance its alliance with Iran by improving relations with Saudi Arabia.

Trump hosted al-Abadi at the White House on 20 March — the 14th anniversary of the US invasion of Iraq that removed Saddam Hussein from power.

Trump has claimed he would have opposed the 2003 invasion carried out by then-president George Bush's administration. But Trump also told Abadi yesterday that former president Barack Obama erred in removing the bulk of the US military forces from Iraq in 2011. Obama's administration eventually rebuilt the US military presence in the country to more than 5,000 to combat Isis.

Abadi said he was thankful for the US military support. "Trump is prepared to do more to fight terrorism. I can sense a difference in terms of being head-to-head with terrorism," Abadi said at an event hosted by Washington think tank the US Institute of Peace.

But Abadi drew a line at an ongoing military US presence in Iraq. "We have to be careful. The public opinion, especially in the US, would not encourage sending more troops," he said. "There are better ways to defeat terrorism." Abadi estimated Iraq's reconstruction needs $55bn just to repair damaged infrastructure and pressed for greater financial assistance from the US and other international donors.

Obama's administration last year earmarked $4.5bn in the State Department's fiscal year 2017 budget to help rebuild Iraq. Trump's budget outline for the 2018 fiscal year cut the department's budget by almost a third, but it is not clear if assistance to Iraq would be affected.

The White House said the US and Iraq will consult on steps to deepen commercial ties and promote investment and to expand collaboration in the energy sector. But the State Department said that the administration's immediate focus is to defeat Isis.

US secretary of state Rex Tillerson is hosting a ministerial summit of members of the US-led international coalition fighting Isis on 22 March, in part to generate greater pledges of financial assistance for Baghdad. The previous ministerial summit, in July 2016, generated $2.5bn in pledges for Iraq. "I am satisfied with the pledges, but I am not satisfied yet with the delivery," Abadi said.

Abadi at a speech before the US Chamber of Commerce lauded the presence of international oil companies in Iraq, despite security challenges. US commerce secretary Wilbur Ross said the administration will rely on the chamber's US-Iraq Business Initiative forum to promote greater commercial ties, but urged Abadi to continue economic and legal reforms to improve Iraq's investment climate.

Iraq produced 4.41mn b/d in February, according to Argus estimates. Iraq is looking to produce 5mn b/d in the second half of 2017. But its oil output in 2017 likely will be 1.5pc below 2016 levels as a result of the Opec production cut agreement valid for January-June, according to the IMF.

Tillerson helped organize a visit by Saudi foreign minister Adel al-Jubeir to Iraq last month, marking the highest-level Saudi official visit to Baghdad since 1990. The White House is urging Baghdad to foster "more constructive ties with countries in the region."

The Saudi visit was a "good opening for neighborly relations," Abadi said. "Our Saudi friends probably used to think that the Iraqis are in conflict and under control of our Iranian neighbors, but we are not," he said.