Dubai: With trays of sweet tea and a tour of Babylonian treasures at the national museum, Iraq’s Oil Minister Jabbar Al Luaibi welcomed energy reporters to Baghdad. A month after railing about Opec data, he chose a softer approach to make the case that his country pumps more oil than the group acknowledges and won’t join other members in cutting output.
Iraq took the unusual step this week of trying to persuade oil-industry watchers, and by extension the Organisation of Petroleum Exporting Countries, to accept its statistics pegging last month’s crude output at more than 4.7 million barrels a day. Opec has calculated a lower tally in recent months, based on information from analysts.
The stakes are much higher now. Iraq, Opec’s second-largest producer, is embroiled in a war against militants occupying much of the country, and it needs to sell all the oil it can pump to pay for and win the fight. The government wants an exemption from cuts as Opec prepares to assign output quotas to its members in an effort to rein in a global glut and shore up prices. By digging in its heels, Iraq may prevent Opec from paring output for the first time in eight years.
“We want you to see for yourselves what our production is,” Al Luaibi said on Sunday. “We have reached good figures, but still we are ambitious and heading toward more production.”
More production
Opec will meet on November 30 to try to complete a deal its 14 members reached last month in Algiers that aimed at reducing their collective output and propping up crude. The group signalled last month that Iran, Nigeria and Libya would be spared from any cuts, due to sanctions and security issues that have curtailed their production. Iraq, citing its war with Islamic State militants, wants similar treatment.
After inveighing in Algeria against the secondary sources of data cited by Opec, Al Luaibi offered his media guests at the Oil Ministry an unprecedented breakdown of the nation’s official output figures. Al Luaibi reiterated that Iraq is fighting a costly war against extremists “on behalf of the world” and would not cut production from current levels.
Instead, Deputy Oil Minister Fayyad Al Nima said, the question for Iraq is, “do we freeze or do we go up?” The ministry issued a statement a few hours later announcing the tender of 12 small to medium-sized oilfields — a sign that it has no plans to scale back output.
Opec Secretary-General Mohammad Barkindo arrived in Baghdad on Tuesday to discuss Iraqi supply. He said the producer group is facing its “hardest” challenge as members debate cuts needed to balance the market, in remarks distributed by Iraq’s Oil Ministry.
Conflicting numbers
Opec pumped a record 33.75 million barrels a day last month, data compiled by Bloomberg show, as its members scrap with each other and with higher-cost producers for market share. Benchmark Brent crude is trading at around $50 a barrel, less than half its 2014 peak.
While Iraq refuses to pump less oil, Falah Al Amri, the head of the state oil-marketing agency, said the ministry wants also to resolve the “misunderstanding” over conflicting numbers for the crude it produces.
Much of the discrepancy arises from oil pumped in Iraq’s semi-autonomous Kurdish region, which exports independently of the federal government, Al Amri said. Some secondary sources give much lower figures for Kurdish output than the ministry’s monthly data. Another issue in the spat over Iraq’s output is the amount of condensate and oil products that the country blends with its crude before storing, consuming or exporting it, he said.
As part of its outreach effort, the ministry took the exceptional step of providing a breakdown of output from each of its producing regions and bringing the heads of each regional company to Baghdad to meet the reporters. But their divergent numbers for Iraqi production have yet to be reconciled.
Vicious war
Iraq’s finances have been under pressure since mid-2014, when a drop in oil prices coincided with Islamic State’s capture of large swathes of territory in the north and west of the country. The Iraqi army and other forces began an offensive last week to recapture the northern city of Mosul.
Posters honouring fighters killed in action against Daesh adorned the walls and gates of public buildings in Baghdad, 400 kilometres behind the front lines of the Mosul campaign.
“Iraq is fighting a vicious war, a bloody war,” Al Luaibi said, “In spite of all the difficulties, Iraq is progressing very fast in pushing the production of oil.”
