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Iraq cuts 650,000 b/d from southern fields in May to comply with OPEC+ cuts: report

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Iraq cuts 650,000 b/d from southern fields in May to comply with OPEC+ cuts: report

Highlights

Iraq needs to cut production by 1.061 million b/d in May, June

Cuts in south spit between state-run and IOC fields

Iraq has struggled to comply with OPEC+ cuts in the past

Dubai — Iraq, OPEC's second largest oil producer, has cut 650,000 b/d from it southern fields to comply with OPEC+ cuts of 1.061 million b/d agreed for May and June, an official from state-owned Basra Oil Co told state-run Iraqi News Agency on Wednesday.

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The cuts are split between state-run fields and those operated by international oil companies, Khaled Abbas, the deputy director general of Basra Oil Co told the agency.

Output from state-run fields, including Luhais, Ratawi, and Nahran Omar, was trimmed by 350,000 b/d, while production from Exxon Mobil's West Qurna 1 was cut by 50,000 b/d, Lukoil's West Qurna 2 by 70,000 b/d and the remaining reductions came from Eni's Zubair and BP's Rumaila, he said.

OPEC+ is trimming a record 9.7 million b/d from its May and June production to help soak up excess oil. The cuts among the 23-member countries will gradually ease through April 2022. Saudi Arabia, the UAE and Kuwait said on Monday they would cut an extra 1.2 million b/d from their June output, on top of their OPEC+ commitments, to help balance the oil market.

Biggest hit

Iraq in 2019 struggled to stick to its OPEC+ quota, pumping more than is allowed. However the coronavirus epidemic is taking a toll on its oil industry.

Iraq took the biggest hit to production for OPEC members in April of 110,000 b/d as low fuel demand and a lack of product storage space forced its refineries to reduce crude runs sharply, according to the latest S&P Global Platts OPEC survey. Production was 4.54 million b/d in April.

Unlike other fellow producers in OPEC such as Saudi Arabia, Kuwait and the UAE, Iraq was not able to open the taps despite the expiry of the old OPEC+ cuts agreement in March.

For example, Iraq's state oil marketer SOMO in April struggled to sell crude to India, one of its biggest customers.

Iraq is struggling with the outbreak of the coronavirus and lockdowns that have taken their toll on its oil industry and forced Malaysia's Petronas to evacuate staff in March and stop production from the southern oil field of al-Gharraf, which pumped some 90,000 b/d.

Iraq also wants to form a delegation to discuss renegotiating technical service contracts with international oil companies in light of current oil-market developments, according to the government program presented by the new prime minister, Mustafa al-Kadhimi.