Business | Oil & Gas
Oil supply above demand, says Iraq
Baghdad expects to sign deal with Shell to collect flared gas for local power plants.
- Reuters
- Published: 00:21 May 20, 2008
Sharm Al Shaikh: Global oil supply is already higher than demand so more crude from the Organisation of Petroleum Exporting Countries (Opec) won't push prices down, Iraq's oil minister Hussain Al Shahristani said on Monday.
"There is more oil in the market than consumers want," Shahristani said on the sidelines of the World Economic Forum. "What is driving up prices is an increase in speculative funds. An increase in production by Opec countries would not really change the scenario - it would not affect the price."
US crude traded at over $126 a barrel on Monday after hitting a peak near $128 on Friday. Under pressure from consuming nations hit hard by the oil price rally, Saudi Arabia said on Friday it would boost output by 300,000 barrels per day (bpd).
Iraq aims to boost total oil exports to 2.3 million bpd from two million bpd by the end of the year, Shahristani said. That would take oil exports to their highest level since before the US-led invasion in March 2003.
Gains would be made through "infrastructure improvement," he added. Basra exports in the south would rise 200,000 to 300,000 bpd from current levels of around 1.6 million bpd, while exports of Kirkuk oil in the north would rise around 100,000 bpd, he added.
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Improved security has allowed Iraq to boost exports through its northern pipeline to Turkey since last summer. Shipments would reach 600,000 bpd by the end of the year from around 500,000 bpd now, Shahristani said.
Kirkuk exports would hit 600,000 bpd in June as work at Iraq's Baiji refinery will free up more oil for exports, the head of Iraq's State Oil Marketing Organisation (Somo) Falah Alamri said yesterday.
The export rate would drop after the refinery work but would improve again later, he said.
Iraq expected to sign a gas project deal with Royal Dutch Shell this summer, Shahristani said.
Under the terms of the deal, Shell would collect gas that is currently flared at Iraq's southern oilfields and supply it to local power plants. The remainder would be exported as liquefied natural gas (LNG), Shahristani said.
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