Iraq expects global oil demand growth in 2023; no plans to cancel projects: minister

Source: S&P Global Platts

Iraq expects global oil demand to grow at a pace of 3% a year in 2023, and OPEC’s second largest oil producer does not plan to cancel projects due to the current slowdown, the country’s oil minister said Oct. 20.

In 2023, “will start the normal oil demand increase of 3% per year,” Ihsan Ismaael told the MEA Energy Week virtual conference organized by Siemens Energy.

OPEC has forecast a “catching up” by the sectors most affected by COVID-19 lockdown restrictions to help a rebound in oil demand back to previous volumes by about 2022.

However, other organizations have more bearish views for an oil demand recovery.

BP, most notably, said in September that the market may never recover to prepandemic levels of roughly 100 million b/d, as the company charts a future invested heavily in renewables.

Global oil consumption, which has plunged a record 8% this year, will return to pre COVID-19 levels in 2023 if the pandemic is contained, the International Energy Agency said in its annual World Energy Outlook, released Oct. 13.

IOC contracts

Iraq does not plan to cancel any projects or change contracts with international oil companies, or IOCs, operating in the country, he added.

“Our contracts with our IOCs in Iraq will stay as they are,” Ismaael said. “There are no canceling for the projects. There is some slowdown due to cash shortage. The recovery of the payment for them is not as normal but it is acceptable for both sides.”

IOCs operate fields such as Exxon Mobil’s West Qurna 1, BP/CNPC’s Rumaila, Lukoil’s West Qurna 2, and ENI’s Zubair. The IOCs are paid for the oil they produce and under complex terms of their technical service contracts, they get quarterly payments for a fixed fee/b linked to production.

Rumaila alone can pump about 1.5 million b/d, which is more than a third of the country’s 5 million b/d oil production capacity. Iraq pumped 3.74 million b/d in September, the same level in August, according to the latest S&P Global Platts OPEC+ survey.

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