Iraqis, Not Americans, Calling the Shots in Oil Industry, Expert Says
HONOLULU (Oct. 2) -- The Iraq oil industry, calling its own shots without U.S. control, should get production levels up to about 3.1 million barrels a day by April, an East-West Center energy expert said, and that will likely lead OPEC to further cut oil production in December.
Fereidun Fesharaki, who hosted a meeting of Iraqi oil officials in Dubai two weeks ago, is convinced that the country is now able to increase oil production after a number of failures to meet earlier forecasts. "People discounted the idea that they (Iraq) could increase production. They're now able to do it and the market was surprised," said Fesharaki, a former energy adviser to the prime minister of Iran before joining the East-West Center.
Last week OPEC unexpectedly agreed to cut oil production by 900,000 barrels a day instead of waiting until next year when Iraqi oil production was predicted to increase. OPEC ministers will meet again in December, and Fesharaki predicted they will cut OPEC oil production by another 500,000 to 1 million barrels if Iraq does what it convinced OPEC ministers and Fesharaki it could do.
While Iraq's southern exports via the Persian Gulf total about 1 million barrels of oil a day, the north pipeline has been closed due to sabotage. However, Fesharaki was convinced by Iraqi oil officials that the northern pipeline will be fixed within several weeks and able to transport another million barrels a day by early next year. While there's no guarantee the sabotage will end, "If you blow up a pipeline, you fix it. The real issue was, can you produce? It now seems that they can. Sabotage can't stop production."
He said Iraqi oil officials told him they are making their own decisions without American control. "Contrary to popular belief, the Iraqis have been empowered to run the oil industry as they see fit," Fesharaki said. "The oil industry is being controlled 100 percent by the Iraqis."
While the United States had planned in the beginning to control the oil industry, U.S. officials learned that little progress would be made unless the Iraqis ran it, Fesharaki said. "All the U.S. wants is to produce oil for exports and get some money to pay for the expenses of running Iraq." However, he emphasized that oil income will still be under American control as the United States controls the Ministry of Finance.
Fereidun Fesharaki can be reached at 808-944-3637 or ff@hawaii.rr.com