Vienna — Iraq hopes to boost its crude exports to 3.3 million b/d by the end of this year, oil minister Adel Abdul-Mahdi said Friday, though Baghdad has revised down its 2020 crude production target from a previous 9 million b/d to around 6 million b/d.
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Speaking ahead of a meeting of OPEC ministers in Vienna, Abdul-Mahdi also said the Kurdistan region had yet to boost northern exports to the agreed level of 550,000 b/d in 2015.
Last month, Iraq's crude exports averaged 3.145 million b/d, up 68,000 b/d from April, marking a record high for the second consecutive month.
"I think we are approaching 3.2 [million b/d] and maybe by the end of the year we will hit 3.3 [million b/d]," Abdul-Mahdi said.
Current Iraqi production is around 3.6 million b/d, according to the latest Platts' estimates.
Asked if Iraq was still hoping to boost production to an ambitious 9 million b/d by 2020, Abdul-Mahdi said he thought that target was "exaggerated."
"I think Iraq is capable of producing at least 6 [million b/d] by 2020. This is our scheduled planned target," he said.
While the majority of the country's production comes from fields in Basra province in the far south, the largest increase in exports has come from northern Iraq.
This followed a January budget agreement that brought some of the independent Kurdistan exports under federal control and allowed for export of previously stranded Kirkuk oil to reach Ceyhan as well.
Under a temporary agreement from December, the KRG is expected to export 250,000 b/d of crude from its own fields in Kurdistan on behalf of Iraq's state-owned SOMO and 300,000 b/d from fields in the Iraq-controlled Kirkuk region via the Turkish port of Ceyhan.
In return, the agreement confirmed that Baghdad would provide the KRG with 17% of the Iraqi national budget.
But Erbil has argued that it has not been receiving payment and has threatened to suspend the deal and restart independent exports by a June 15 deadline.
"The KRG should receive the payment necessary for their expenses and we should continue cooperation," Abdul-Mahdi said.
"We have good cooperation on the ground to receive the 550,000 b/d. They are doing their best. But we are not yet at the levels that we agreed upon. What we received from the beginning of the year up until now is about 300-350,000 b/d," he said.
While the KRG has publicly criticized Baghdad and warned it would pull out of the deal, both Abdul-Mahdi and Iraqi Finance Minister Hoshyar Zebari, a Kurd, have said that it will take more time for both to ramp up to their respective commitments, especially with a fiscal crisis.
The KRG has borrowed an estimated $3-$6 billion of cash and crude from a combination of local oligarchs, foreign governments and oil companies to pay its bills, and is thus still selling oil independent of SOMO in order to pay down the debts.
Iraq is facing a drop in oil prices and increased security spending, which has restricted its excess cash.
"This is a budget question," Abdul-Mahdi said. "The KRG should receive the payment necessary for their expenses and we should continue cooperation."
The dispute with the KRG, complicated by the Islamic State offensive, has limited the progress on the Kirkuk fields.
When the Islamic State launched its offensive in June 2014, security of the Kirkuk oil field's Avana Dome and the nearby Bai Hassan oil field was threatened.
The KRG sent in Peshmerga forces, which filled the security vacuum. And a month later, sent in a technical team led by private Kurdish firm KAR Group, which has operated the two fields ever since.
Baghdad maintains the fields still belong to the North Oil Company, and that the crude produced should be sent to SOMO at Ceyhan.
On a technical level, however, experts have said that all the Kirkuk area fields should be developed in harmony, as they share existing above ground infrastructure and complimentary structures below.
The fields under NOC control still are at 150,000 b/d, Abdul-Mahdi said.
The fields under KRG are estimated to be between 170,000 b/d and 200,000 b/d. "In Kirkuk, now we are keeping the actual production, the present production, but we have to discuss with the KRG the whole issue of Kirkuk," Abdul-Mahdi said, who said the political issues need to be resolved before they can determine the next technical steps, including whether BP can be awarded a longer-term contract.
BP has a reservoir management agreement with Iraq, with an eye toward longer projects.
"It will not be managed by two managements. This should be first dealt with then the production issue," he said.
--Staff reports, firstname.lastname@example.org