High Prices Ahead: Iraq halve its Oil production forecasts

High Prices Ahead: Iraq halve its Oil production forecasts
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The Opec member announced that it is reviewing its oil supply from 12M barrels to 6.5 – 7M barrels by 2017. You think that current oil prices are high? Wait to see what gas will cost you in the next decade. More details from The Australian:

“The country’s Oil Ministry, with backing from the Prime Minister Nouri al-Maliki, will set a new target to produce between 6.5 million and 7 million barrels per day by 2017, down from original plans to pump 12 million barrels, according to industry insiders.

Iraq, which is a member of the OPEC cartel that pumps 40 per cent of the world’s oil, produces about 2.68 million barrels a day, barely higher than under Saddam Hussein.

It had been hoped that with a huge injection of foreign investment, it would be able to challenge Saudi Arabia as the world’s biggest oil exporter this decade.

Confirmation it has scrapped the old target will add to fears that global supply will be unable to keep pace with demand in coming years.

It is understood that government negotiations to change the long-term service agreements signed by companies in the past two years based on the old production target will begin soon.

Analysts said companies would seek improved terms to compensate them for losing out on revenue, which at present is earned for each barrel of oil produced above a base target.

Baghdad believes it would not be in its interests to try to achieve the 12 million target by 2017 because boosting global supply would depress prices.

Ministers also argue that there is not sufficient demand for the extra oil, despite soaring prices. Last month, Saudi Arabia cut its output by 800,000 barrels a day after pumping more in response to the political crisis in North Africa, complaining that the extra crude was sitting in tankers with no customers.”

Source: http://www.theaustralian.com.au/business/iraqi-oil-production-cutback-plan-adds-to-global-supply-fear/story-e6frg8zx-1226050749186

Update:

“KHAIRAT, Iraq, May 8 (Reuters) – Iraq does not plan to lower its 12 million barrel per day oil output capacity goal or to redo contracts with oil firms over their plateau targets, Deputy Prime Minister for energy Hussain al-Shahristani said on Sunday.

“Absolutely not. There is no intention at all to renegotiate the contracts,” Shahristani told Reuters at the launch of a power plant project outside the city of Kerbala.

Shahristani’s comment followed market speculation that Iraq might have to officially slash its longstanding production capacity target of 12 million bpd and renegotiate contracts with international oil companies to reduce their individual output targets.”

Source: http://af.reuters.com/article/energyOilNews/idAFLDE74705820110508

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