Iraq may break with OPEC

The US government’s advisor on oil and petroleum, Philip J. Carroll has said that Iraq needs to increase its oil production capacity in order to facilitate the reconstruction process, according to the Washington Post (May 16).

  • E-Mail
By  Massoud Derhally Published  May 17, 2003

The US government’s advisor on oil and petroleum, Philip J. Carroll has said that Iraq needs to increase its oil production capacity in order to facilitate the reconstruction process, according to the Washington Post (May 16).

Carroll, who headed Royal Dutch Shell in the United States and now advising Iraq’s oil ministry, believes Iraq may have to operate outside the framework the OPEC cartel.

“Historically, Iraq has had, let's say, an irregular participation in OPEC quota systems,” Carroll told the Washington Post, adding “They have from time to time, because of compelling national interest, elected to opt out of the quota system and pursue their own path. . . They may elect to do that same thing. To me, it’s a very important national question.”

Before the US led war, Iraq was producing close to 2.6 million barrels of oil a day, a figure that some in the US government would like to increase to 6 million barrels. But Iraq’s oil producing infrastructure has been widely neglected as a result of 12 years of sanctions. Depending on whom you speak to, the country will need anywhere between US $1 billion to $5 billion to restore the infrastructure to its pre-war level.

To sustain a greater level of oil production would require an even larger investment. The general consensus is that Iraq will need anywhere from $20 billion to $30 billion to help develop some of its 75 oil fields of which only 15 are functional. Iraq is said to have a capacity to produce up to 8.3 million barrels of oil per days.

As the country attempts to get back up on its feet, it will have to reckon with a behemoth debt that is estimated to be between $130 billion and $400 billion. Japan one of the many creditors to Iraq, has said it would grant the country time to repay its debts but would not write off the amount owed to Japan.

“We cannot agree to cutting the debts,” said Japan’s Finance Minister Masajuro Shiokawa on May 14, reported the Japanese news agency Kyodo News.

Iraq’s massive external debt will be discussed by finance ministers of the Group of Eight (G-8) nations in a two-day meeting held May 16-17 in the French seaside resort of Deauville.

Adnan Pachachi, Iraq’s former foreign minister in pre-Saddam times told Arabian Business in an exclusive interview on the eve of the Iraq war, that the country needs $80 billion to help rebuild the country in the first year alone.

Iraq’s estimated 130 to 150 billion barrels of oil reserves, rank the country second in the world, after Saudi Arabia estimated to have 263 billion barrels of oil reserves.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code