Opec and non-Opec members should act to rebalance world oil supply and demand

Abu Dhabi: Opec (Organisation of the Petroleum Exporting Countries) and non-Opec countries should act promptly to rebalance world oil supply and demand or the damage could be deeper and take time to recover, a senior official of Iraqi oil ministry said in Abu Dhabi on Wednesday.

“Without cooperation, the valuable asset will miss out and it would be devalued. We have to act together. Oil industry doesn’t deserve declining of this valuable cargo,” said Dr Falah Al Amri, Iraq’s Opec Governor and Director General of State Oil Marketing Organisation of Iraq’s Ministry of Oil speaking at Argus Middle East Crude Conference.

Saudi Arabia and Russia chalked out a plan to stabilise oil market by freezing output levels at January levels. Other countries in the region too backed the proposal without committing on production cuts.

“The market is in a dangerous situation. We have to do it today, it will be too late tomorrow. Russia is willing to cooperate, which is a good sign.”

Al Amri said Iraq will try to maintain its crude oil market share in Asia, Europe, Americas and other markets, through implementation of fair and reasonable flexible marketing policies.

“Steady moderate yearly increase in Iraq oil production has been in line with the global oil demand.”

On the production targets of the country, he said the country is targeting crude oil production of six million barrels per day by 2020.

“That’s what the plan is in the ministry of oil. We have to cooperate with international oil companies and negotiate with them. It’s not going to be easy.”

Sustainable development

“At the same time, we do not want to flood the market with oil. “We have to take into consideration the yearly demand and partners in Gulf region. It would be sustainable development and growth but not a jump affecting the international market.”

Iraq has 143 billion barrels of oil reserves representing about 17 per cent of the crude oil reserves in Middle East and 8 per cent of total global reserves. The current oil production is about 4.775 million barrels per day.

“In 1979 there was a plan to produce 6 million barrels between 1979 and 1984 but it did not materialise due to war with Iran and instability.”

The oil revenues of Iraqi government have been declining sharply hitting the economy hard, he said. “The battle against Daesh caused huge costs, destruction in the infrastructure and increase in unemployment which is estimated to be around 25 per cent. We have to take all measures necessary to reduce all types of subsidies particularly in the energy sector.”