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Iraq to gradually up oil sales by 700,000 bpd

LONDON: Iraqi Oil Minister Amir Muhammad Rasheed said on Saturday that Iraq has decided to increase oil production and exports gradually by about 700,000 barrels a day.

Rasheed said the release of spare parts by the United Nations urgently needed to rehabilitate Iraq's oil industry was "a positive sign" and Baghdad had decided to increase oil production to full capacity. Iraq sells oil under the UN's oil-for-food programme.

"Increasing our production and exports is a serious gesture to the oil market and our people," Rasheed told Reuters in a telephone interview from Amman.

"But we will monitor closely the removal of holds on spare part contracts hoping that we won't be forced again to alter our production and export plans."

Iraq at the start of the year took the precautionary step of reducing production by about 300,000 bpd saying that holds on spare parts contracts at the United Nations were depriving its industry needed equipment.

Recently, said Rasheed, output had been cut by a further 400,000 bpd, slicing exports to about 1.7 million bpd.

Iraq now hoped to rebuild export sales by 700,000 bpd to the 2.4 million bpd level that was reached at the end of last year, he said. Baghdad also produces up to 700,000 bpd for domestic consumption.

The return to production capacity of about 3.1 million bpd is expected in about two months.

Rasheed said the higher output level would help support Iraq's request to be fully reintegrated into OPEC's output quota system.

Rasheed was speaking to Reuters before his departure to Vienna for an OPEC oil ministers conference which starts on Monday. Iraq has not been party to OPEC supply curbs.

He said rising output would allow Baghdad to sign more sales contracts under the seventh phase of the UN's humanitarian oil-for-food programme.

"We will definitely sign more oil contracts, starting immediately," he said.

The United Nations imposed sanctions on Iraq in 1990 after its invasion of Kuwait and since 1996 has sold limited amounts of oil under strict UN supervision.-Reuters