Iraq oil minister says crude price ‘fair’, aims to hike output capacity

BAGHDAD: Iraq's new oil minister Thamer Ghadhban said on Wednesday the current price of crude was "fair" and that the country, OPEC's second-largest producer, would act responsibly in providing ample supplies to the market.

Ghadhban also said the oil ministry aimed to increase output capacity and support foreign energy companies by helping them overcome any bureaucratic hurdles.

OPEC agreed in June to pump more oil after pressure from U.S. President Donald Trump to curb rising prices and to make up for an expected shortfall in Iranian exports. Oil hit a four-year high of $86.74 a barrel on Oct. 3 but has since eased to $76 as concern of tight supplies faded.

Iraq, which relies on vast oil wealth as its most important source of income, is seeking to increase crude production capacity to 7 million barrels per day (bdp) by 2022 from 5 million bdp now. Iraq currently pumps around 4.6 million bpd, second only to Saudi Arabia in OPEC.

The country is trying to recover from years of violence including a war with Islamic State militants that wrecked infrastructure and is seeking to reduce corruption and manage rivalries with Kurdish authorities that run oil-rich areas in the north.

"We will do our best to stabilise the market," Ghadhban told reporters after officially taking over the oil portfolio from Jabar al-Luaibi.

"The oil price at the moment is at a fair price," he said in response to a question about an upcoming OPEC meeting in December.

"It's not too high, it's not 100 dollars per barrel and it's not 30 dollars".

"We will look after our country as a first priority but will not put aside the interests of the consumers."

The International Energy Agency estimates the maximum that Iraq can sustainably pump is 4.8 million bpd, leaving little room to increase output significantly in the short term. The majority of its crude exports go to Asia.

IRAN SANCTIONS, KURDISH EXPORTS

Ghadhban, nominated by Prime Minister Adel Abdul Mahdi and confirmed as minister in a parliamentary vote last week, said he would look at ways to reform the oil ministry, including by eliminating nepotism.

Ghadhban said he would seek to develop oil refineries by increasing their production capacity and reducing gas flaring.

Iraq has continued to flare some of the gas extracted alongside oil at its fields because it lacks the facilities to process it into fuel. Iraq has said it hopes to end gas flaring by 2021.

Immediate challenges for Ghadhban and the rest of Iraq's new government will include how to contend with imminent U.S. sanctions on Iraqi neighbour Iran.

Ghadhban said that Iraq would prioritise its own national interests and "review" current exports of oil to Iran, which are estimated at less than 30,000 barrels a day. He said this was a minor issue given the amount.

On the subject of resuming oil exports through semi-autonomous Kurdish areas of northern Iraq, he said: "We don't have any previous issues with the region ... we will work to overcome all obstacles."

Exports from Kirkuk's oilfields were halted after an Iraqi military offensive to retake the disputed territories which had come under Kurdish control in 2014 following a failed Kurdish independence referendum opposed by Baghdad.

The bulk of Iraq's oil is exported via its southern terminals, which account for more than 95 percent of the OPEC producer's state revenue.

Iraq's southern oil exports averaged 3.488 million barrels per day (bpd) in October, two oil executives told Reuters on Wednesday.

Exports were down from the September average of 3.560 million bpd owing to bad weather, which slowed shipments on some days, the executives said.