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Iraq Expects Highest Monthly Oil Exports Since '03


Iraqi Oil Minister Hussain al-Shahristani

Iraqi Oil Minister Hussain al-Shahristani

BAGHDAD (Reuters) -- Iraq's oil exports have reached an average 2.1 million barrels per day (bpd) in July so far, the finance minister has said, putting them on track for the biggest month since the 2003 U.S.-led invasion.

Higher revenue from oil plus about $2 billion in fees from mobile phone companies will give the country a supplementary budget of up to $3 billion, Finance Minister Bayan Jabor told journalists in Baghdad.

"Now we are exporting 2.1 million bpd average and sometimes 2.15 million bpd," Jabor said. "This is delightful and encouraging."

Jabor said mobile phone companies had paid the Iraqi government $2 billion recently in punitive early license fees.

Iraq's three mobile networks -- Korek, Asiacell, and Kuwait's Mobile Telecommunications Co (Zain) -- were fined $18.6 million for poor service in May.

Jabor said that earlier, the government had forced the companies to repay their licence fees of $1.25 billion each, originally set to be received in three installments. The bulk of that will be included in the supplementary budget.

"Therefore, the supplementary budget will be in the region of $2.8 billion up to $3 billion," Jabor said. "But I don't know what the cabinet will decide. It may increase it or reduce it."

War-ravaged Iraq had to chop its 2009 spending plans three times after global oil prices plunged from a peak last summer of more than $147 per barrel and the country's lackluster production levels failed to improve.

The final $58.6 billion version, was dependent on average oil income of $50 per barrel and exports of 2 million bpd.

Almost all of Iraq's government revenue comes from oil.

Since the inasion, Iraq's export rate had only broken above the 2 million bpd mark last May, when it hit 2.01 million bpd. Since then, lower global demand and technical problems at the country's southern oil fields in Basra have kept crude exports fluctuating between 1.7 million bpd and 1.925 million bpd, which they reached last month.

Pressure To Boost Oil

Jabor said the ministry's suggested budget for 2010 was based on expected oil export volumes of 2.15 million bpd at a price of $58 per barrel. "It is just a suggestion. The committee that is working on this is expected to finalize its work in the coming two weeks."

Oil Minister Hussain al-Shahristani has been under pressure to boost Iraq's lackluster oil production, urgently needed to help Iraq rebuild after years of chaos and sectarian bloodshed that nearly tore the country apart.

Shahristani offered eight oil and gas fields to foreign firms for 20-year, fixed-fee contracts, in a June 30 bidding round.

Just one contract was awarded after the bidding revealed a large gap between what global firms wanted to be paid for developing the fields and what the ministry was prepared to pay.

In the end, BP and state-run China National Petroleum Corp. (CNPC) won Rumaila, Iraq's largest producing oilfield near the southern oil hub of Basrah.

Last month, two fields in Iraq's largely autonomous region of Kurdistan started producing, an apparent breakthrough despite Shahristani rejecting oil concessions the Kurds' signed independently with foreign firms.

Kurdistan Natural Resources Minister Ashti Hawrami said on July 14 that the Tawke oilfield in Iraqi Kurdistan, developed by Norway's DNO International, is producing 40,000 bpd and output should reach at least 50,000 bpd within weeks.

He said the northern region's Taq Taq field, jointly developed by Addax Petroleum and Turkey's Genel Enerji, was fluctuating from 30,000-40,000 bpd.

But it is still unclear how foreign companies in Kurdistan are to be paid if the government does not recognize their contracts.

Jabor reiterated the Oil Ministry's position that oil companies with fields in the Kurdistan region would have to be paid out of the Kurds' own 17 percent share of the national budget, dashing hopes Baghdad would make a concession.

"The central government has not approved the contracts made between foreigns firms and the Kurdish government," Jabor said. "The companies should be paid from the Kurdish share."

The Kurds are unlikely to agree to pay the firms for national output out of their own pockets.

Jabor also said that cabinet had approved two new mobile phone licenses which would be put to auction soon. One of them was a 3G license, he said.
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