‘Pledged’ OPEC oil output cuts encouraging: Kuwait – Iraq’s crude exports from south climb further: minister

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KUWAIT CITY, Jan 9, (AFP): Kuwaiti Oil Minister Essam al-Marzouk, whose country heads a committee to monitor crude output cuts, on Monday described as encouraging production reductions announced so far.

The Organization of the Petroleum Exporting Countries agreed in November to cut its production by 1.2 million barrels per day starting January to reduce a global supply glut that had kept prices painfully low.

A group of 14 non-OPEC producers, led by the world’s top crude producer Russia, agreed in December to lower their output by another 600,000 bpd, making the total pledged cuts at 1.8 million bpd.

“So far, all Gulf producers, Iraq and Russia have announced their commitment to the cuts,” Marzouk told a news conference after talks with OPEC Secretary General Mohammad Barkindo.

“These commitments make up between 60 percent and 70 percent of the pledged cuts” from the beginning of January, said the minister.

“We expect the compliance to the cuts to be big because of its impact on boosting prices.” Kuwait heads the five-member Joint Ministerial Monitoring Committee set up to monitor compliance with the pledged cuts.

Marzouk said he discussed with Barkindo mechanisms to monitor the cuts by OPEC and non-OPEC members.

The Kuwaiti iminister said they discussed monitoring output of each member country and also the level of exports with the assistance of international companies. Barkindo described as historic the agreement between the 24 OPEC and non-OPEC producers.

Marzouk said the committee would meet in Vienna on Jan 21 and 22 to finalise the monitoring mechanisms

Meanwhile, Iraq’s crude exports from the country’s southern ports inched up last month to 3.510 million barrels per day for the first time, the oil minister said Monday, lauding his ministry’s plans and the work of a handful of international companies developing Iraq’s prized southern fields.

Jabar Ali al-Luaibi described December exports as the “highest and unprecedented” so far. November daily exports from government-controlled fields in central and southern Iraq stood at 3.407 million barrels.

The ministry’s statement didn’t release figures of crude exports through Iraq’s northern pipeline network run by the semi-autonomous Kurdish region, which typically average about 600,000 barrels a day.

The heart of the country’s oil industry is in the mainly Shiite central and southern parts of Iraq that were spared the June 2014 blitz by the Islamic State group, which seized large stretches of the country’s north and west, including oil fields and facilities.

Al-Luaibi underlined that the December levels will not affect Iraq’s commitment to cut daily production as per the OPEC deal aiming to lower output for a six-month period by 1.2 million barrels per day to prop up plummeted oil prices, starting from Jan 1. The 14-member group is supposed to produce 32.5 million barrels per day. Non-OPEC nation also agreed to pare an additional 600,000 barrels a day off their production.

Iraq, OPEC’s second-largest producer, already started measures to reduce output by 200,000 barrels a day to 4.351 million barrels since early this year, as per Iraq’s share in the deal, the oil minister added, expressing his satisfaction that current oil prices hover around $53 per barrels, from $40s before OPEC dead.

Iraq, where oil revenues make up nearly 95 percent of the budget, has been reeling under an economic crisis since late 2014, when oil prices began their descent from a high of above $100 a barrel. The 2014 onslaught by IS has exacerbated the situation, forcing Iraq to divert much of its resources to its 2-year old costly war.

Iraq’s 2017 budget stands at about 100.67 trillion Iraqi dinars, or nearly $85.17 billion, running with a deficit of 21.65 trillion dinars, or about $18.32 billion. That’s based on an oil price of $42 per barrel and a daily export capacity of 3.75 million barrels from all of Iraq.

Iraq holds the world’s fourth largest oil reserves, with some 143.1 billion barrels.

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