Iraq is to maintain a surcharge on oil exports despite a plunge in crude sales, storing up trouble for OPEC as a "wild card", the Middle East Economic Survey (MEES) reported Monday.
The industry newsletter said it had learnt from authoritative sources that the Baghdad regime had decided "to stick with their demand despite its negative impact.
"It is further understood that the authorities have institutionalized the new system with modifications, the clear implication being that it will remain in place over the long haul.
"Furthermore there are signs that some international oil companies are exploring ways of accommodating the Iraqi demand," the Nicosia-based report said.
As part of a campaign to end a decade of sanctions, Baghdad demands that the surcharge be paid outside UN control.
When the OPEC oil cartel slashed production by 1.5 million barrels per day (bpd) on January 17 to try to keep oil prices up, the calculations were based on the assumption that Iraq would return to full production in early February.
"However, these prognostications are not borne out by MEES soundings on the Iraqi front which indicate that Iraqi oil exports are likely to be sluggish.
"What is absolutely clear is that Iraq represents the wild card which will, more than any other factor, determine what the OPEC 10 need to do on the supply side," the report said.
Iraq's December exports under the UN oil-for-food programme averaged 600,000 bpd, compared with 2.1 million bpd in November and 2.36 million bpd in October.
Exports in January could be even lower than December, MEES said. Only 548,000 bpd have been confirmed so far.
Current capacity in Iraq is no more than 2.8 million bpd, MEES said, adding that there was no early expansion in prospect.
The United Nations reported last week that Iraq had lost $1.38 billion in oil revenues since December 1.
MEES noted that Iraq's original surcharge of 50 cents has been dropped to 40 cents. The 11-nation Organization of Petroleum Exporting Countries agreed to slash output by 1.5 million bpd -- some five percent of total production.
Saudi Arabia, the world's biggest producer, has pledged to adjust production to balance any loss of Iraqi output.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)
