Iraq signed 7 deals in December.
It is developing two giant oil fields.
Help from the U.S. and Russia to defeat ISIS would enable production to rise sharply over time.
Iraq says it will cut 210,000 b/d in 2017 to help OPEC.
Its long-term goal is to rival the Saudi production level.
Iraq recently awarded seven contracts to increase its production by over 4.7 million barrels per day (mmbd) in the years ahead. Lukoil (OTCPK:LUKOY), the largest oil firm in Russia, signed a deal to develop one of the world’s largest untapped oil fields, the West Qurna-2 reservoir. Norway’s Statoil (NYSE:STO) will share in the project. “We can announce that Lukoil has won the contract to develop the West Qurna-2 oilfield,” Oil Minister Hussein al-Shahristani said. The projected output for the field is 1.8 mmbd.
Iraq’s production has been rising despite its battle with ISIS. Its November production was estimated to be 4.5 mmbd, the second highest in OPEC. An increase of 4.7 mmbd would put production over 9 mmbd, not much lower than that of Saudi Arabia.
During the presidential campaign, Trump had said he would “knock the hell out of ISIS.” Russian President Vladimir Putin has expressed hopes that Donald Trump will improve U.S.-Russian cooperation. But U.S. officials have legal constraints on how far they can go due to American law which currently prohibits any military-to-military relations with Russia as a result of its annexation of Ukraine’s Crimea region. Lukoil’s involvement in Iraq gives Russia an even greater incentive to destroy ISIS.
Iraqi Oil Minister Jabar al-Luaibi told the official Kuwait News Agency his country was committed to cutting as much as 210,000 barrels per day from production starting next month. But he had also claimed that Kurdistan would reduce its oil exports. However, that claim was disputed. “The Kurdistan Region will continue its oil exports as before and has not decided to abide by the OPEC accord to reduce the exportation of oil,” said Dilshad Shaaban, the deputy head of the energy and natural resources committee in the Kurdistan Parliament. Iran’s oil minister said there are no guarantees an OPEC production ceiling will be enforced.