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Iraq is Opec's second-largest producer

Iraq supports Opec policy to defend market share

DOHA, March 26, 2015

Iraq supports the Organization of the Petroleum Exporting Countries (Opec's) policy of defending the group's market share by keeping oil production steady, an Iraqi parliamentary oil official said, despite pressure on the Arab state's budget.
 
The Opec holds its next meeting in June and so far looks set to keep policy unchanged. Adanan Al Janabi, Iraq's chairman of oil and energy parliamentary committee, said this would be a move he agreed with.
 
"Iraq is with the general consensus of Opec that we should not be fighting for the price but rather for market share," he told reporters on the sidelines of an industry event in Doha.
 
"Opec should not be paying the price for everybody else to produce as much as they can and take the market from Opec."
 
Last November, Opec kingpin Saudi Arabia persuaded members to keep production unchanged to defend market share.
 
The move accelerated an already sharp oil price drop from peaks last year of more than $100 per barrel that was precipitated by an oversupply of crude and weakening demand. Benchmark Brent oil settled up $1.37, or 2.5 per cent, at $56.48 a barrel.
 
Asked about the risk of Iran boosting its production if it reached an agreement on its nuclear programme which would potentially further suppress crude prices, Al Janabi said countries with large oil reserves must consider a sustainable long-term strategy.
 
"Iran, Iraq and Saudi Arabia should look after their markets and focus on the markets because they are big reserve countries that look at the long term," he said.
 
"They should try to bridge a financial crisis but looking at the long term rather than immediate reactions (to price)."
 
Iraq, Opec's second-largest producer, is building up debts to the oil companies developing its giant fields. Western oil companies work at Iraq's southern oilfields under service contracts, which are currently based on a fixed dollar fee for additional volumes produced.
 
As a result of the oil price halving, the amount of crude needed to pay the companies has roughly doubled - reducing revenue to a government fighting an Islamic State insurgency.
 
"We started discussions with the oil companies and we are looking into the problem we are facing," Al Janabi said.
 
He added that the government is in talks with companies to try and shift contract terms so that when production increased, payments for part of the increase in production and revenue would be paid to the companies. "This is rather than paying regardless of the price and revenue." --Reuters
 



Tags: Opec | Iraq | Market share |

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