By Alex Lawler - Bloomberg News

PARIS -- OPEC officials expressed concern the war in Iraq may cause the departure of a founding member of the group, leading to additional oil supplies and the threat of lower world prices.

"Will Iraq walk out of OPEC? My answer is I don't know," said OPEC President Abdullah bin Hamad al-Attiyah, who is also the oil minister for Qatar. "We have to wait and not jump to give any judgment. The coming months will give a clearer picture, even for OPEC."

He said he "hoped" Iraq would stay.

In day 22 of the war, U.S.-led forces are in Baghdad and tightening control of Iraq, bringing closer a return of the nation's oil sales. Coalition forces control Basra, the second-largest city. Kirkuk, in the northern oil region, fell Thursday, the British Broadcasting Corp. said. Iraq is traditionally OPEC's fourth-largest oil producer.

Oil sales from Iraq, whose reserves are second only to those of Saudi Arabia, halted when the war began, leading other members of the Organization of Petroleum Exporting Countries to pump more to prevent shortages. Oil prices have fallen by about a fourth since early March as the threat of a longer disruption in Iraqi oil exports eased.

"Iraq must reflect before it increases production," said Chakib Khelil, the oil minister for OPEC country Algeria, at an oil conference in Paris. "At the present moment, there is a legal problem about who represents Iraq. Is there a government? Who is going to decide whether to produce or not to produce oil? I don't believe a decision has been made."

OPEC was formed in September 1960 in Baghdad, with Iraq, Iran, Kuwait, Saudi Arabia and Venezuela as members. Since then, the United Arab Emirates, Nigeria, Libya, Indonesia, Algeria and Qatar have joined.

Unlike other members, Iraq has no quota because of United Nations sanctions in place since the Gulf War.

OPEC agrees to limit oil sales to bolster prices.

Iraq could raise oil production to pre-Gulf War levels of 3.5 million barrels a day within three years, if $5 billion is invested, according to the Centre for Global Energy Studies, a London-based consulting company founded by former Saudi oil minister Sheikh Zaki Yamani.

Iraq was pumping about 2.5 million barrels before the current war began.

Its output capacity could reach 8 million barrels a day after nine years and $30 billion, the consultants have said.

By Globe Wire Services, 4/11/2003

NEW YORK -- US oil prices dropped nearly 5 percent yesterday as Kurdish fighters took control of the oil city of Kirkuk in northern Iraq a day after the fall of Baghdad, easing fears of damage to Iraqi oil fields.

Dealers said that expectations of a flood of oil from OPEC members in the coming weeks, combined with rising production from Nigeria following disruptions caused by ethnic violence, were also weighing on the market.

''Short-term the market is already bearish because OPEC supplies will build stocks. The news from Kirkuk adds to that sentiment,'' said Geoff Pyne, consultant to Sempra Energy.

US light crude oil on the New York Mercantile Exchange fell $1.39, or 4.8 percent, to $27.46 a barrel. London Brent blend crude oil eased 75 cents to $24.50 a barrel.

Kurdish guerrillas captured Kirkuk, the hub for Iraq's northern oilfields that pump 40 percent of the nation's crude, after government troops gave it up virtually without a fight.

The United States said it plans shortly to take control of the city from the Kurdish fighters, Washington's allies in northern Iraq. In Iraq's southern oilfields the US military said it aimed to restart production in less than an initial estimate of three months.

''We are hoping to pump about 200,000 bpd to 800,000 bpd. Our initial assessment was that it would take 12-15 weeks before we could expect to see any oil flowing,'' said Colonel Michael Morrow.

''We'll probably take less time than that,'' he said, adding that the US Army Corps of Engineers would attempt to speed up the process with the help of Iraqi oil workers.

A decision on the timing of a resumption in exports will not be taken until interim authorities are installed.

Also weighing on prices was a report yesterday from the International Energy Agency that said OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy. The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria, and Venezuela.

''Significant production curbs . . . may impact upon the industry's ability to rebuild stocks,'' the report said.

But OPEC's president, Abdullah Hamad bin al-Attiyah of Qatar, said yesterday in Paris that the world's oil markets are glutted, and the resumption of Iraqi oil production could make that worse.

Al-Attiyah said the current crude oil excess totals more than 2 million barrels a day.

OPEC officials said Monday that oil ministers planned to meet April 24 in Vienna whether or not the war in Iraq has ended.

twincities.com

OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy, the International Energy Agency said Thursday. Most OPEC members have been producing at maximum capacity to keep supplies plentiful during the war. However, oil ministers fear OPEC might be oversupplying the market just as demand starts falling to its seasonal low. The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria and Venezuela.

Financial Review network Apr 8 Chip Cummins, The Wall Street Journal

US army engineers, offering the most authoritative assessment yet of Iraq's huge southern oilfields, said a resumption of petroleum exports is months away, further damping hopes of a quick return of Iraqi crude to world markets.

According to Brigadier-General Robert Crear, commander of the South-Western Division of the Army Corps of Engineers, a lack of replacement parts for infrastructure in the fields might also crimp initial output once production resumes.

The US effort has been further hampered by the unwillingness of Iraqi oil workers and managers to return to the job amid continued fighting in the south.

"We don't know how much it's going to cost and how long it's going to take" to bring exports from southern Iraq back on line, he said. "It'll be months, but I can't tell you how many."

Last week, a British commander in charge of UK forces in the region estimated it would take about three months and $US1 billion ($1.6 billion) to restart exports from Iraq's massive southern fields, now largely held by US and British forces.

That estimate surprised some oil-industry analysts who had been expecting exports to resume within weeks, since damage to the fields appears minimal.

Meanwhile, the US is moving to recruit senior executives to help run Iraq's oil industry after the war. Phillip Carroll, the former chief executive of Shell Oil, the US operation of Royal Dutch/Shell Group, would lead Iraq's national oil company, sources said.

It is not clear whether Mr Carroll, who retired last year as CEO of Fluor, would formally head the Iraqi company or exercise control by heading an advisory body in charge of Iraqi petroleum in a postwar transition period.

One industry official said the US was also considering an Iraqi-American to oversee Iraq's State Oil Marketing Organisation, which is in charge of exports.

The official also said Rodney Chase, deputy CEO of BP plc, was being considered as a deputy to whoever runs SOMO. Mr Chase, due to retire from BP this month, could not be reached for comment. A BP spokesman declined to comment.

While the overall US plan for running Iraq's oil industry isn't known yet, it is becoming clear that Washington is seeking to recruit top executives from the largest global oil companies on both sides of the Atlantic. Their expertise could bode well for the resurrection of the Iraqi oil industry, which was nationalised in the 1970s and has been badly hit by war and sanctions.

The resumption of Iraqi exports is crucial for global oil markets, which have tightened in recent months.

A strike in Venezuela hobbled exports from that big oil producer for months, while a colder-than-normal winter across the northern hemisphere helped erode stocks of inventory in big consumer countries, particularly the US. More recently, political violence in Nigeria has sent major oil companies fleeing the region and shutting down oil production there.

Retreating Iraqi soldiers appear to have torched just nine wells in the oil-rich south. All but two of the Iraqi fires have been extinguished.

The Inside VC Network

LONDON -- OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy, the International Energy Agency said Thursday.

But OPEC's president, Abdullah Hamad bin al-Attiyah of Qatar, said Thursday in Paris that the world's oil markets are glutted, and the resumption of Iraqi oil production could make that worse.

Officials at the Organization of Petroleum Exporting Countries said Monday that oil ministers planned to meet April 24 in Vienna, Austria, whether or not the war in Iraq has ended.

Most OPEC members have been producing at maximum capacity to keep supplies plentiful during the war. Oil ministers, however, fear OPEC might be oversupplying the market just as demand starts falling to its seasonal low.

The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria and Venezuela.