July 12, 2003	Saturday	Jumadi-ul-Awwal 11, 1424

RIYADH, July 11: With crude prices remaining strong, Iraq struggling to increase production and the rest of Opec reining the output in June, as confirmed by the International Energy Agency and the Platts, independent energy consulting house, the Organization of Petroleum Exporting Countries (Opec) appears to be in a strong position to hold on to its current output level when it meets in Vienna later this month to discuss its strategy.

“The Opec, excluding Iraq, pumped 25.28 million barrels of oil a day in June, a decrease of 800,000 bd from May, indicating a sharp pullback from pre-Iraq war levels, a monthly report by the International Energy Agency said Friday. The report was also confirmed by Platts.

The Opec-10 produced 125,000 bd less than its own production ceiling in June, the report said.

Iraq was only able to produce 415,000 bd, up from 280,000 bd, though wellhead production may have already reached 700,000 bd to 800,000 bd, the IEA said.

The report said opening the taps to 2 million bd of Iraqi oil production by the end of the year is a “potentially more realistic target.”

The global energy information, research, consulting and media and marketing services division of The McGraw-Hill Companies, Platts also confirmed the cut in Opec output in a survey reported Wednesday saying, Opecs eleven members, including Iraq, pumped an average 26.23 million bd of crude in June, down 0.38 million bd from May’s 26.61 million bd.

Excluding Iraq, which is still struggling to restore output to pre-war levels, the ten members with 25.77 million bd production quotas, down 0.58 million b/d from their May average of 26.35 million bd and just 0.37 million bd above their collective ceiling which came into effect at the beginning of June, Platts survey said.

Leading the cuts in production was Saudi Arabia, pulling out 595,000 bd in June to produce 8.6 million bd, the report said.

Venezuela continued to have problems ramping up production to pre-strike levels, with wells pumping out 2.35 million bd in June, unchanged from May.

Economic recovery and falling oil prices will increase total oil demand next year by 1 million bd to 79.08 million bd, the report said. The Opec supply fall, which came despite the modest return of Iraqi exports following the war, was accompanied by a dip in non-Opec production, the International Energy Agency (IEA) said in its monthly report.

The IEA said Opec, including Iraq, produced 25.69 million barrels per day (bpd) in June —665,000 bpd below the May volume of 26.36 million bpd.

Without Iraq, the fall in Opec supplies was even deeper, amounting to a cut of some 800,000 bpd, and averaged 25.28 million bpd, the IEA said.

“This report estimates that the Opec-10 actually cut production to some 125,000 bpd below the June target of 25.4 million bpd,” the IEA said.

Production from the older heavy oilfields in Venezuela, where production was earlier disrupted by a strike, seems to be faltering, the agency said. In Nigeria production shut in March by civil unrest could remain offline until late 2003.

The largest June production cut was from Saudi Arabia, where output in June was down by 595,000 bpd from May, the report said.

Opec oil ministers’ are due to meet on July 31 in Vienna to discuss their strategy to keep the oil market prices in the targeted $22-28 band.

Despite Iraq’s de facto oil minister Thamir Ghadban’s prediction that crude output would reach1.5-mil bd by the end of June, Iraq managed to boost net average production by only 200,000 bd to the estimated 460,000 bd, thanks to looting, sabotage on the Kirkuk-Ceyhan pipeline, and lack of refining capacity.

The Iraqis have now sold some 18 million barrels of crude in two tenders, the more recent of which was awarded this week and consisted entirely of Basrah Light to be lifted from Gulf port Mina al-Bakr. Two million barrels of the previous tender were also Basrah Light from the Gulf. The rest of the crude sold in the first tender was Kirkuk-produced before the war and stored in tanks at Turkish Mediterranean port Ceyhan. Sabotage has prevented the Iraqis from resuming crude flows from Kirkuk along the pipeline to Ceyhan.

Kuwait also reduced production by a substantial volume, cutting by 160,000 bd to average 2.16-mil bd in June, although it failed to bring production within its 2.038-mil bd quota. Other smaller cuts came from Indonesia, Libya, Qatar, the UAE and Venezuela.

Participants in the Platts’ survey were generally pessimistic about Venezuela, whose production fell by 50,000 bd in June to 2.62-mil bd, a figure some 300,000 bd below the country’s 2.923- mil bd Opec quota.