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Crude oil price to reach $70 per barrel by the end of 2015, predicts Iraq’s oil minister | ||
| 29/03/2015 | ||
It has to be mentioned that the global slump of oil price has badly affected government revenue of Iraq. Furthermore, Iraqi government has lost a major portion of its capital in fighting against Islamic State militants. "In January prices reached the bottom and they can't go any lower than that," Abdel Mehdi told. "Now they're going up, slowly but steadily. They will go up and maybe reach $70 by the end of the year". After Saudi Arabia and its Gulf Arab allies launched air strikes in Yemen, Brent oil price settled at $59 a barrel, on last Thursday. Air strikes have caused fears, and many people think that they could disrupt world crude supplies. Abdel Mehdi said, "Of course political issues such as the crisis in Yemen can give some push to the ascending line of prices, but it will have temporary effect." The fall in world oil prices means Baghdad is now paying companies much more than it would be under the production-sharing model followed elsewhere, and is seeking to renegotiate the terms of its contracts. International firms operate in Iraq's southern oilfields under service contracts, currently based on a fixed dollar fee for additional volumes produced - a formula which has seen Baghdad's bills balloon just as its oil revenue collapses. Abdel Mehdi said he had met with Royal Dutch Shell on Thursday to discuss amending its contract favorably for both sides, but stressed that nothing had been finalized with the major or any other company. "We are still really in the negotiation stage. Nothing has been signed yet with any of the IOCs", he said. Abdel Mehdi said any revision of contracts would not result in major changes to the deals or their structure, and that a production target of 9 million barrels by 2020 remained firmly in place. "We stick with our schedules," he said. Presently, Iraq is exporting 2.9 million barrels per day (bpd) of oil and it will hit 3 million bpd by the end of March. The oil minister said Iraq would try to repay oil companies the $9 billion of payments they are still owed from 2014 by lifting crude from Kirkuk or Basra before the end of June. Asked whether Iraq was concerned about the possible return of Iran to the oil market in the event a deal was reached between Iran and world powers on the nuclear issue, Mehdi said stability in the region was the most important thing. "The gains will be much greater if we have succeeded negotiations between 5+1 with Iran," Mehdi said even though if sanctions were lifted on Tehran's oil sales, supply would increase, putting downward pressure on prices. OPEC is due to meet in June, and Abdel Mehdi said he saw no sign Saudi Arabia would reduce production: "I don't think they have the intention of doing do so. I think they are defending their market share," he said. | ||
Last Update:: 29/03/2015 | ||
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