Iraq New Plateau Oil Production Plan Lower, Longer

–Iraq revised its medium-term oil field redevelopment plan, meaning production will peak slightly lower than 12 million barrel a day target- Deputy Prime Minister

–Iraq expects to be producing between 5 million and 6 million barrels a day of oil by 2015, Deputy PM adds

–Iraq plans to increase its production and exports significantly this year and next year, says Deputy PM

Iraq has revised its medium-term oil field redevelopment plan, meaning that production will peak slightly lower than the previous 12 million barrel a day target, but , said the country’s Deputy Prime Minister for Energy, Hussein al-Shahristani, Wednesday.

Despite the reduction, which comes as little surprise to a skeptical oil industry, Shahristani said Iraq’s growing oil output will continue to play an important part in easing tight global oil markets for years to come.

Iraq expects to be producing between 5 million and 6 million barrels a day of oil by 2015, around double its current level, Shahristani told reporters at the Iraq Refinery conference in London.

He declined to give the revised plateau production target, but said the reduction from 12 million barrels a day will only be minor.

This differs from previous Iraqi government statements. Oil Minister Abdul Kareem Luaiby told reporters in September that, “we are thinking of reaching a production of 8 million to 8.5 million barrels a year to be maintained for 13 to 15 years.”

The 12 million barrel a day target has long been seen by industry analysts as highly unrealistic, given the security, infrastructure and financing challenges Iraq faces.

The revision of the plan was undertaken to “maximize the recovery from each field…and extend the plateau production,” to 2035, Shahristani said.

Despite the change of plan, the redevelopment of Iraq’s depleted old oil fields will remain a significant force in the oil market, Shahristani said. “Iraq is planning to increase its production and exports significantly this year and next year. This should calm the oil market as to the availability of sufficient supply,” he said.

The planned oil production increase, from a base of just under 3 million barrels a day currently, will come from the renovation of many large, but depleted oil fields that were starved of investment during decades of sanctions and conflict. Major international oil companies are leading these projects and have already produced an increase in Iraqi production of around 500,000 barrels a day over the past year, Shahristani said.

Shahristani didn’t agree with comments Tuesday from Venezuelan oil minister, Rafael Ramirez, that the Organization of Petroleum Exporting Countries is over-producing and flooding the market with oil.

“We have not seen any data that indicate there is over-production within OPEC. As a matter of fact, there has been some reduction is supply outside OPEC that has been met by increases in OPEC production. We see the market as balanced,” he said.

Shahristani reiterated that Baghdad won’t recognize contracts any oil company signs with the regional government in Kurdistan. “Any company that will sign [a contract with the Kurdish government] will be treated in the same way [as Exxon Mobil],” he said. “They will be told that their contract has no standing, that it’s illegal.”

Nasdaq