Iraq is nearing a production capacity of 5 million b/d, though it will
comply with its quota under the OPEC production cut agreement, oil minister
Jabbar al-Luaibi said Saturday.

The Islamic State militant group had destroyed about 70% of Iraq’s oil
infrastructure in the north and set fire to 65 wells, Luaibi said, but with
the militant group driven out of the country, Iraq is quickly rebounding.

“They did a lot of damage, but… Iraq’s oil industry is progressing very
fast,” he said at an Atlantic Council energy forum in Abu Dhabi, which was
webcast.

Iraq produced 4.41 million b/d of crude in December, according to the latest
S&P Global Platts OPEC survey.

Some 300,000 b/d of Iraqi production in the northern Kurdistan region remains
offline, in the wake of a failed independence referendum last fall.

Eventually, Iraq aims to hit 7 million b/d, he said.

Iraq is also close to signing three contracts with international gas
companies, which he declined to name, to produce 950 million cubic feet, as
part of the country’s efforts to eliminate associated gas flaring by 2021,
Luaibi said.

Iraq’s December crude production figure is above its quota under the OPEC
production cut agreement of 4.351 million b/d, which it has consistently
exceeded, according to Platts survey data.

Nevertheless, Luaibi said Iraq is “certainly in full compliance with [its
quota], and we have not deviated an inch from the declaration… We still
comply with the OPEC declaration and the level that was set.”

Luaibi has complained that OPEC’s six independent sources used to monitor
production, including S&P Global Platts, have incorrectly estimated Iraq’s
output levels — first for being too low when the deal was being negotiated in
late 2016 and more lately for being too high.

Iraq’s State Oil Marketing Organization on Wednesday pegged Iraq’s
December production at 4.362 million b/d.

Luaibi said Iraq supports continuing the OPEC production cut agreement through
the end of 2018, as planned, amid speculation that the organization could
dissolve the pact if oil prices remain high.

Iraq’s State Oil Marketing Organization on Wednesday pegged Iraq’s December
production at 4.362 million b/d.

Luaibi said Iraq supports continuing the OPEC production cut agreement through
the end of 2018, as planned, amid speculation that the organization could
dissolve the pact if oil prices remain high.

The deal calls on OPEC and 10 non-OPEC countries led by Russia to cut a
combined 1.8 million b/d to stabilize oil prices.

“Overall, the results are satisfactory,” said Luaibi, who had sought an
exemption from the cuts as they were negotiated due to Iraq’s need for revenue
to fight the Islamic State.

“Iraq is in full agreement with OPEC members that the freeze should continue,”
he said. “The market is stabilizing but it’s not 100% stable. You cannot say
everything is rosy.”

–Herman Wang, herman.wang@spglobal.com

–Edited by Maurice Geller, maurice.geller@spglobal.com

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