Iraq Says Oil Exports to Surge as ISIL Violence Away From Output

Jun 25, 2014 8:55 pm ET

June 25 (Bloomberg) -- Iraq’s oil minister said the nation’s crude exports will jump next month, adding to signs that fighting in the country’s north isn’t affecting the south, where OPEC’s second-largest producer pumps most of its oil.

“Oil exports will witness a big increase, as recent events didn’t reflect negatively on Iraq’s crude output and exports,” Oil Minister Abdul Kareem al-Luaibi said in an interview in Baghdad today. “International oil companies are working normally in Iraq.”

While violence in Iraq spurred companies including BP Plc and Exxon Mobil Corp. to evacuate workers from the country, there are few signs so far that oil production is being affected. Iraq’s exports will be close to a record next month, according to loading programs obtained by Bloomberg. Luaibi said in the interview that he’s spoken to BP about increasing output at the Rumaila field, the nation’s largest, without giving a target date. Toby Odone, a BP spokesman in London, declined to comment on the field.

Iraq, holder of the world’s fifth-largest crude reserves, produces and exports most of its oil from the Shiite dominated south, which remains largely unaffected by the clashes. Gunmen today seized the 20,000 barrels a day Ajeel oilfield, which was and remains inactive, in the northern oil hub of Kirkuk, according to a local police statement.

Brent crude, the global benchmark grade, fell as much as 1.2 percent to $113.23 a barrel in London today. It’s still trading near a nine-month high. Luaibi said exports averaged more than 2.5 million barrels a day this month. He didn’t say what they will be in July.

No Infringements

Luaibi said government troops continue to control the state-run North Oil Co. and the Baiji refinery, the country’s largest. Baiji has been shut since June 15 after ISIL insurgents tried to seize the 310,000 barrels-a-day facility.

“The Iraqi Oil Ministry will not allow any party to infringe on its establishments or installations,” he said. “The Oil Ministry is working to regain control of any oil installation taken by gunmen.”

The northern Kirkuk oilfield is defended by troops from the self-governing Kurdistan Regional Government which controls 45 billion barrels of crude reserves in Iraq. Iraq, excluding its Kurdish enclave, holds 150 billion barrels in proven crude reserves. Iraq is the largest oil producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries.

--With assistance from Nidaa Bakhsh in London.