OPEC fears Iraq will drop out. Ministers await decision on status
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.