MEOG: Iraq’s revenue boost

This week’s MEOG includes coverage of Iraq’s 50-year high in oil revenues and steps to take control over the Kurdish oil and gas sector.

As OPEC’s second-largest producer, Iraq stands to benefit more than most from the group’s alliance with Russia and other producing nations that has seen oil prices surge as geopolitical concerns collide with supply/demand dynamics. However, the country’s oil production has struggled to keep up with its quota and issues at major fields exacerbated these problems in March, as output fell 222,000 barrels per day (bpd) off its target.

The Ministry of Oil (MoO) reported that March oil revenues had come in at $11.07bn on a total of 100.56mn barrels exported. Baghdad’s receipts were the highest since 1972 and a significant increase on the $8.5bn earned in February, which itself was an eight-year peak.

The improved earnings come despite Iraq failing to keep up with its OPEC+ quota as output fell by 112,000 bpd compared to February. Production averaged 4.15mn bpd in March, below its 4.37mn bpd quota, which rises to 4.414mn bpd this month and 4.461mn bpd in May.

The drop was the result of 12 days of maintenance at the supergiant West Qurna-2 (WQ-2) oilfield and a week of shutdown at Nasiriyah because of protests, both early in the month.

Meanwhile, the MoO has told semi-autonomous authorities in the northern Kurdistan Region it intends to set up a new state oil firm to manage the Kurdish energy sector. In a letter that was leaked to press, the ministry told the Kurdistan Regional Government (KRG) it must transfer its oil and gas activities to the new company, which would be established between Baghdad and Erbil.

The MoO suggested that the new firm should be called Kurdistan Oil Co. (KOC) and inferred it would be a subsidiary of the recently reconstituted Iraqi National Oil Co. (INOC).

The letter was signed by Oil Minister Ihsan Abdul Jabbar, who gave the KRG 15 days (from March 24) to provide the ministry with copies of all oil and gas contracts it has signed with foreign companies over the last 18 years.