Iraq plans to adhere to its lower OPEC+ production quota by reducing refinery runs and increasing oil product imports, while at the same time undertaking field maintenance instead of drastic cuts from certain reservoirs, the country's national representative to OPEC said Dec. 6.
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OPEC+ ministers agreed during a meeting on Dec. 4 to stay the course and stick to a 2 million b/d oil quota cut that started in November and will be in place through to the end of 2023.
Under the OPEC+ deal, Iraq is expected to hold its crude oil production at 4.431 million b/d from November through the end of 2023.
OPEC's second-biggest producer saw its output fall 4.8% on the month to 4.430 million b/d in November amid a lower quota, according to data from state oil marketer SOMO.
Iraq's quota fell to 4.431 million b/d in November from 4.651 million b/d in October.
Iraq pumped 4.58 million b/d in October, which was below its quota of 4.651 million b/d, according to the latest Platts survey by S&P Global published Nov. 7.
Adhering to quotas
Iraq's Prime Minister Muhammad al-Sudani had said Nov. 15 that his country would seek a higher OPEC+ quota as it chases more revenues. However, Oil Minister Hayan Abdul-Ghani later affirmed the country's commitment to the current OPEC+ production cut of 2 million b/d.
Iraq struggled to stick to its quota when OPEC+ reduced its production quotas in 2020 and 2021 during the peak of the pandemic that prompted the coalition to cut output by a historic 9.7 million b/d from mid-2020.
Iraq not adhering to quotas hasn't been an issue this year as OPEC+ increased its production.
Iraq reduced its refinery runs in November by about 15% to 20% and will continue to do the same in December and January, said Saadoon, who is also SOMO's deputy director general for crude oil and gas affairs.
Iraq drew oil stocks in November as it reduced refinery runs and a mild winter weather means product imports will not significantly increase, he added. In general, Iraq sees lower domestic consumption in winter, compared to the hot summer months when the country burns more crude for power generation.
To adhere to the current OPEC+ quota cuts, Iraq plans to enter some fields into maintenance to avoid drastic production drops from certain reservoirs, Saadoon said.
"We can handle the cut through the operation of fields," said Saadoon. "We will benefit from field maintenance. Reduction will not be specific to one field. This depends on which grade we want to produce: heavy, medium or light."
Southern oil export capacity
Currently, Iraq exports two crudes produced from its southern fields -- Basrah Medium and Basrah Heavy. It stopped exporting Basrah Light in 2022 and the grade is now mostly channeled for domestic consumption.
Field maintenance "depends on the policy of the oil ministry and which production is required for domestic consumption and exports," said Saadoon. "It also depends on market needs."
Iraq may start re-exporting Basrah Light if there is more production of that grade and if rehabilitation work at the southern Khor al-Amaya oil terminal is finished, said Saadoon. The terminal is needed because Basrah Light exports require a dedicated facility, with the current southern infrastructure earmarked for Basrah Medium and Basrah Heavy exports.
Iraq expects to boost its southern oil export capacity by 100,000 b/d to 150,000 b/d to as much as 3.45 million b/d in the second half of 2023 by upgrading its single point moorings (SPM), said Saadoon. Iraq currently has four SPMs.
If Iraq installs a fifth SPM and rehabilitates Khor al-Amaya then it can increase its southern oil export capacity by 1.3 million b/d, but these projects will take one-to-two years to complete.