'OPEC influence deecided in Baghdad'

'OPEC influence deecided in Baghdad'

Maher Chmaytelli, Agence France-Prese, Cairo

Occupied Iraq will not show up at the OPEC meeting to be held in Qatar on Wednesday, although the long-term influence of the cartel is being decided in Baghdad, the same place where it was born 43 years ago, experts said.

The United States has said it would be up to a "representative" Iraqi government to take the decision on whether to remain or not in the 11-member Organization of Petroleum Exporting Countries.

"I think that we are very aware of the fact that oil and nationalism are very closely intertwined in Iraq," Alan Larson, Under Secretary of State for Economics and Business, told Congress on June 4.

"We will want to make sure that any decision on their future participation in OPEC is a decision that the representative government takes," he said.

"But I think it's one where we need to be careful not to be seen as steering that because it does need to be seen as a decision they make in the interests of Iraq," he added.

Under its interpretation of Resolution 1483 passed by the UN Security Council last month, the U.S.-led coalition will retain ultimate authority in Iraq until a sovereign government has been installed following a constitutional referendum and nationwide elections, a process that may take two years.

Experts said the influence of OPEC will be significantly diminished if Iraq ultimately chooses to withdraw, as it would deprive the cartel of control over 112 billion barrels of proven reserves, the second largest in the world behind Saudi Arabia.

"There will be a struggle in Iraq between those who would want high prices, and therefore restricted production and quotas, and those who would want more market share," said Naji Abi Aad from Lebanese consultant Econergy.

"On the long run, if Iraq goes for high prices, it would have to remain in OPEC."

Washington's chief executive officer of Iraq's oil advisory board, Philip Carroll, told the Washington Post on May 17 Iraq may be best served by ignoring OPEC quotas and producing as much oil as it can.

But Cyril Widdershoven, from the Netherlands-based Global Energy Security Analysis (GESA), said "Iraq's future will not be bright with oil prices at U$S16 or below."

"Is the interest of Iraq tomorrow to see the oil price at six dollars? I don't believe it. I don't think this a pragmatic answer," the cartel's president, Abdullah bin Hamad al-Attiyah, told AFP on May 26.

"I believe personally that Iraq needs OPEC and OPEC needs Iraq and Iraq is one of the founders of OPEC," added Attiyah, who is also Qatar's energy minister, referring to the establishment of the cartel in Baghdad in 1960.

But Abi Aad cautioned that OPEC members, and mainly the cartel's kingpin Saudi Arabia, would have to make some concessions on quotas in order to accommodate Iraq's rising production and keep Baghdad on board.

Regular Iraqi oil exports are not expected to restart until early July at the earliest, according to the Cyprus-based Middle East Economic Survey (MEES).

The U.S.-appointed interim head of the Iraqi oil ministry, Thamir Ghadhban, last month said output would reach 1.5 million barrels per day (bpd) by the end of June, of which nearly one million bpd would be available for export.

He said production would return to its pre-war level of 2.5 to 3 million barrels per day by the end of the year.

Figures published in different studies forecast that Iraq's pre-1991 Gulf war capacity of 3.5 million bpd could be achieved in two years.

And in view of its enormous reserves, Iraq has the potential to boost capacity to between six and eight million bpd, six to eight years from now, provided $30 to $40 billion in investments are injected to develop its fields and export outlets.