Iraq's southern oil exports will rise modestly to around 3.25 million barrels per day (bpd) in 2016, the head of state-owned South Oil Company (SOC) has said, as the country struggles to boost production in the face of slumping crude prices. Shipments at the southern port of Basra, which include exports from super giant fields supervised by SOC and other fields towards Baghdad, were at 3.021 million bpd in August, the latest period for which figures are available.
Foreign oil companies have said they see little chance of a rise in Iraqi production this year or next after a request from Baghdad to slash development spending. The government has less money to pay them due to lower oil revenues. SOC head Hayan Abdulghani Abdulzahra told Reuters export growth in 2016 would rely on production increases in fields operated by those firms as well as state-owned companies.
"This increase will be in stages," Abdulzahra said in an interview on Sunday, without providing a breakdown or timeline. "The export system is ready currently to export this figure or more." International firms such as BP, Royal Dutch Shell, ExxonMobil, Eni and Lukoil operate in the southern oilfields under service contracts, whereby they are paid a fixed dollar fee for production.
Those agreements have put Baghdad's coffers under immense strain, as the halving of global oil prices since last year hammered the revenue it receives from selling oil. Abdulzahra said SOC had not yet received the firms' budgets for next year but expected to see them during the fourth quarter. Southern oil exports hit a record high of 3.064 mln bpd in July following a decision by Iraq to split its crude stream into two grades, Basra Heavy and Basra Light, to resolve quality issues.
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