Iraq won’t cut 12 mln bpd oil output capacity goal

Iraq does not plan to lower its 12 million barrel per day oil output capacity goal or to redo contracts with oil firms over their plateau targets, Deputy Prime Minister for energy Hussain al-Shahristani said on Sunday.

“Absolutely not. There is no intention at all to renegotiate the contracts,” Shahristani told Reuters at the launch of a power plant project outside the city of Kerbala.

Shahristani’s comment followed market speculation that Iraq might have to officially slash its longstanding production capacity target of 12 million bpd and renegotiate contracts with international oil companies to reduce their individual output targets.

“We are contracted for announced production capacity of around 12 million barrels per day,” he said. “But how much we will produce, really, this depends on the international market situation and the market demand.”

Shahristani also said the oil ministry had reached a final draft contract on a $12 billion project to capture associated gas at southern oilfields and sent the deal to Iraq’s cabinet for approval.

A senior oil official had said two weeks ago that legal hurdles had delayed the deal with Royal Dutch Shell (RDSa.L: Quote) and Mitsubish (8058.T: Quote) to capture some of the 700 million cubic feet of natural gas that Iraq flares at its oilfields every day.

“This issue (final draft contract) now is presented to the cabinet,” Shahristani said. “After the cabinet decides, the contract will be signed.”