OPEC members are expected to cut oil production when they convene in March to push up prices to at least $70 a barrel, Iraq's oil minister said Saturday. Hussain Al-Shahristani also described the country's political tensions, bureaucracy and lack of funds as main impediments to developing Iraq's hydrocarbon resources. “The year 2009 will be a tough year around the world and that will be reflected on the oil demand and then prices will drop,” Al-Shahristani told a symposium in Baghdad on developing Iraq's oil and gas industry. “In March, OPEC will convene and there will be an intention for more production cuts to shore up prices and encourage production from non-OPEC members,” Al-Shahristani added. “We do believe that the price should be no less than $70 for a barrel.” Last December, OPEC announced a 2.2 million barrel production cut aimed at boosting prices that have plummeted from mid-July highs of $147 per barrel. The cuts came on top of another two million production cut instituted in the last quarter of 2008. But oil prices continued to deteriorate with benchmark light, sweet crude for March delivery dropping on Friday a dollar, to settle at $40.17 a barrel on the New York Mercantile Exchange. Iraq is a member of the Organization of Petroleum Exporting Countries but is not committed to its production quota as the war-plagued country produces less than its potential. Al-Shahristani also renewed his objection to oil deals signed between the Kurds and Western oil companies describing them as a main “impediment” in approving the country's long-awaited hydrocarbon law as they “contradict the law and contradict Iraq's benefit.” The Kurds run a three-province semiautonomous region with vast oil reserves. They argue that the Iraqi constitution gives them the right to unilaterally negotiate and sign oil deals, without consulting with the central government in Baghdad. The Kurds' nearly two dozens deals have left politicians at loggerheads since February 2007. “Iraq's oil sector should not be taken hostage by the current political situation and it should be freed to be developed properly,” he said. He also called on the government to ease some of its bureaucracy and enable the ministry to have a say on major contracts to speed up development of Iraq's dilapidated oil and gas infrastructure. “Now, we have dilapidated and eroded pipelines...we can't buy new ones because we don't have enough money especially the 2009 budget has not been approved yet.” Iraq, which sits on the world's third-largest oil reserves of at least 115 billion barrels, has offered 19 oil and gas fields to international companies for development in two major bidding rounds.
