Iraqi Membership of OPEC

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Iraq is a Founder Member of the Organization of the Petroleum Exporting Countries (OPEC)[1] but had its production quota suspended in 1990 due to Iraq's invasion of Kuwait under Saddam Hussein[2]

Foundation

Iraq hosted the conference that led to the foundation of OPEC in Baghdad in September 1960, along with Iran, Kuwait, Saudi Arabia and Venezuela.[3]. However after the initial years, the Iraqi government began to become frustrated with the reluctance of member countries to adopt a unified negotiating stance with international oil companies. Instead each member country had decided to negotiate separately, with the result that the oil supermajors were able to switch production away from Iraq in reaction to harsher governmental demands.[4].

OPEC played a key part in the nationalisation process in 1972, providing loans to compensate for a transitional period where Baghdad would lose revenues from the Iraq Petroleum Company.[5]

Rivalry with Iran

Iraq was locked in rivalry with neighbouring producer Iran in the 1980s over OPEC production quotas, at the same time that they fought an eight-year war. Iraq demanded parity of quota with Iran at around 3.4 million barrels per day (bpd), but OPEC consistently denied this as Iran's stated proven reserves were higher, and OPEC quotas are based on reserves.[6] In response Iraq flouted the quotas. In 1986 then Minister of Oil Issam Chalabi said Iraq would ignore its OPEC quota of 1.54 million bpd of exports, producing instead whatever amount would best serve Iraqi interests.[7]

This rivalry continued in 2011 following the US occupation of Iraq, when Iran successfully opposed a move led by Saudi Arabia to raise OPEC oil output quotas in order to meet shortfalls in supplies from Libya.[8]As a result, no formal agreement on OPEC production levels could be reached.[9]

Suspension

After the 1991 Gulf War, the United Nations Security Council imposed a continuing ban on Iraqi oil exports that remained in place until the Oil for Food program was initiated in 1996. As a result, in 1998, OPEC formally suspended Iraq's production quota, a state of affairs that remains as of late 2012, however in October 2011 Iraq asked to rejoin the OPEC quota system by 2014."[10]

Iraq and OPEC following the 2003 war

Iraqi oil output reached its highest in two decades in February 2011 at an average of 2.08 million bpd, which also made it the biggest single contributor to world oil supply growth that month. The website Live Oil Prices reported that this was deemed by OPEC to pose a threat to its control of the global supply of oil, and Leo Drollas of the Centre for Global Energy Studies stated that an extended period of stability for Iraq "could have a major destabilising effect on OPEC and the oil price."[11]

In October 2011, the country asked to rejoin OPEC's quota system for crude input in 2014 as it reached an average of 2.9 million bpd. Falah al-Amri, director of the State Oil Marketing Organisation (SOMO), stated that the country aieds to increase oil output to 3.4 million bpd by 2012 and to 4.5 million bpd by 2013. However, al-Amri indicated that the country would "seek the biggest possible quota."[12]

Iraq was selected to take over the OPEC presidency in 2012, taking over from Iran. The OPEC presidency is a ceremonial post that rotates among the 12 members of the organisation, chosen on the consequence of members' alphabetical names, and is for a one-year term.[13]

References

  1. "Member Countries" Organization of the Petroleum Exporting Countries website Retrieved 27 November 2011.
  2. "Opec leaves Iraq oil surge off agenda" Financial Times 17 December 2009.
  3. "Member Countries", OPEC, retrieved 27 November 2011.
  4. "Iraq - Post-World War II Through the 1970s", US Library of Congress, retrieved 30 November 2011.
  5. "The Iraq Petroleum Company 1914-1982", Zajel, 1 February 2005.
  6. "Iraq - Oil in the 1980s" US Library of Congress Retrieved 30 November 2011.
  7. "Iraq - Oil in the 1980s", US Library of Congress, retrieved 30 November 2011.
  8. "Iran calls for OPEC cuts, Arab members unlikely to agree" The Daily Star, 12 November 2011.
  9. "Iran Energy Profile: Still OPEC's Second-Largest Oil Producer: Analysis", Eurasia Review News & Analysis, 22 November 2011.
  10. "Iraq Aims to Join OPEC Quota System in 2014, Official Says", Business Week, 26 October 2011.
  11. "OPEC member Iraq oil output may affect future oil prices" Live Oil Prices Retrieved 27 November 2011.
  12. "Iraq Aims to Join OPEC Quota System in 2014, Official Says" Business Week, 26 October 2011.
  13. "Iraq Expects To Be Given OPEC Presidency In 2012 - Oil Min", Rigzone, 13 December 2011.