Opec is likely to decide to cut oil production targets when it meets in March, which should help prices gradually rise back above a fair price of $70 a barrel, Iraqi Oil Minister Hussain Al Shahristani said yesterday.
He also said he will seek new powers for oil officials to sign big deals without approval of Iraq's cabinet in an effort to revive flagging production. He blamed red tape and a slow budget process for delaying efforts to boost production in Iraq.
"The year 2009 will be a tough economic year. It is expected demand for crude oil will drop," Shahristani told a Baghdad oil industry conference. "In March, Opec will meet and there is an intention to decide a further cut to shore up prices."
Iraq, a founding member of Opec with the world's third-largest reserves, is not bound by the group's production limits but has had trouble maintaining its output – much less meeting ambitious growth targets – because of crumbling infrastructure.
"We expect that crude prices will be restored to more than $70 a barrel, but this will not be achieved in coming months. This will happen gradually."
Shahristani said he hoped to speed up reconstruction of Iraq's oil sector by forming a national oil company, which would be able to make deals without waiting for the cabinet approval required in the country's cumbersome political process.
He said red tape had held up the import of oil equipment which was stuck in port, and the slow budget process had delayed much-needed investment.
"I find it strange that explosives and drugs are moving through the borders, but when it comes to equipment of the Iraqi oil ministry we face obstructions," he said.
"We have dilapidated oil pipelines, which affects crude production. So far we have not been able to buy a new pipeline because we do not have enough money and the 2009 budget is not yet approved."
Shahristani repeated the government's ambitious plans to increase oil production, now about 2.4 million barrels per day, to 4.0 or 4.5 million by 2013 and 6.0 million by 2018.