As Iraq begins oil cuts, steep challenges remain for OPEC compliance
Technical, financial, and political obstacles will make it nearly impossible for Iraq to meet an OPEC pledge to cut 1 million bpd by May 1.
Workers survey the Halfaya oil field in 2011. It is being developed by China’s CNPC, with junior partners Petronas of Malaysia and Total of France. (ESSAM AL-SUDANI/AFP/Getty Images)
BASRA/BAGHDAD/ERBIL - Iraq is facing daunting technical and financial complications as it begins to cut oil production in support of an OPEC-plus agreement to take nearly 10 million barrels per day (bpd) off the market to combat falling crude prices.
Unlike previous cuts, this one is so large that Iraq can only meet its new quota by ordering curtailments at oil fields operated by international oil companies (IOCs) – an expensive proposition likely to trigger difficult negotiations with IOCs, given contract provisions that protect companies from discretionary shut-ins by guaranteeing payments for oil ordered to remain below ground.
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