Iraq blames KRG for producing above August crude target

Iraq has blamed the semi-autonomous Kurdish region in the north of the country for its failure to limit crude production to 3.4mn b/d last month.

Figures released today by state-owned marketer Somo put overall Iraqi output at 3.578mn b/d in August, slightly lower than Argus' estimate of 3.67mn b/d. Iraq's quota under the latest Opec+ deal is 3.8mn b/d in August-December. But Baghdad pledged to produce 400,000 b/d less than that in August and September to make up for producing above its 3.59mn b/d quota in May-July.

Iraq said it exceeded its self-imposed 3.4mn b/d target because the Kurdistan Regional Government (KRG) failed to deliver its share of the extra cut. Of the additional 400,000 b/d reduction that Iraq's oil ministry pledged to make last month, only half was scheduled to come from fields in federal Iraq, and the remainder was supposed to come from the Kurdish region, an oil ministry source said.

Federal Iraq produced 3.145mn b/d last month, making it 102pc compliant with its pledged cut including compensation volumes, according to the Somo figures. But KRG-controlled fields produced 456,000 b/d last month, putting the region's compliance at just 7pc, Somo said. This in line with Argus' estimates and little changed from the region's output in July. The Kurdish region has struggled to reduce production because of financial obligations, Khaled Shawani, the KRG minister responsible for dealing with Baghdad, told Iraqi state-owned news agency Ina.

Saudi oil minister Abdulaziz bin Salman stressed last month that those members of the Opec+ coalition which have exceeded their crude production quotas in recent months must fully compensate with extra cuts by the end of September at the latest. But Iraq's August production means it is unlikely to be able to meet the deadline. At the group's next Joint Ministerial Monitoring Committee (JMMC) meeting on 17 September, Iraq may seek to extend its compensation deadline to the end of November, the oil ministry said last week.

By Rowena Edwards