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If you thought Iraq’s plans to increase its oil production to 5 million bpd were rather pie-in-the-skyish, think again.
Iraq’s plans to increase its oil production capacity to 5 million barrels per day to be ready for the end of OPEC’s cuts is “not unrealistic”, principal upstream analyst at Wood Mackenzie, Ian Thom, told Bloomberg in an interview published on Thursday.
“From a production capacity point of view, the investment in a few of the southern fields is taking them closer to that number,” the analyst told Bloomberg.
He went on to add:
“They may be thinking ahead to the end of the nine-month period, when if they can demonstrate capacity of 5 million barrels, it may make for a different conversation with OPEC members.”
In March this year, Iraq’s Oil Minister Jabar al-Luaibi said that the country would have the output capacity of 5 million bpd in the second half this year.
“We achieved this great achievement of 4 million barrels per day ... middle of 2016, and now we have climbed up and we are reaching about 5 million barrels per day beginning of second half of this year,” al-Luaibi said in an interview with CNBC back then.
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In a report on why Iraq’s production growth has underperformed in recent years, Wood Mackenzie said last month:
“Iraq undoubtedly has the large-scale low-cost oil resources in its southern fields to underpin production of over 10 million b/d. But the harsh technical service contract terms, and a myriad of technical, political and security factors have all conspired to subdue growth.”
OPEC’s second-largest producer, Iraq, was the last holdout to the initial deal for a collective cut of production, arguing for an exemption because of funds it needs to fight ISIS, and disputing the secondary sources that the cartel uses for tracking members’ production. Iraq agreed to the deal in the end, pledging to cut 210,000 bpd of its October 2016 production level and cap it at 4.351 million bpd. Since the output cuts began in January, Iraq has not fully complied with its quota of the cuts in any of the months covered under the deal. Its production last month even grew by 44,400 bpd over April, to 4.424 million bpd, making it one of the worst under-complying OPEC producers.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.