During a Wednesday meeting in New Delhi, Iraq offered to increase the amount of oil it provides India by 60%, under long-term contract.
“They have the reserves and they have the plans to raise output significantly,” explained IOC Chairman Sarthak Behuria after the meeting. “They told us they would be ready to offer us longer contracts after five years.”
Any long-term bilateral supply contract with India would surely rile OPEC.
That’s because it would help Iraq avoid falling under the grip of OPEC-imposed quotas. The more Iraq can reach large end markets for oil on their own, the more they can simply do as they please when it comes to production.
Iraq is making it very clear that they aim to be the world’s top oil producer within a decade, whether Saudi Arabia likes it or not:
“We are desirous of a strategic partnership” with India, Hariri said. “By strategic partnership we mean a long-term relationship.”
Iraqi Oil Minister Hussain al-Shahristani wants to boost oil production from its current level of some 2.4 million bpd to 10 million-12 million within the next decade.
That’s more than Saudi Arabia or Russia is currently producing, and could threaten OPEC producers unless Baghdad accepts a quota. But Shahristani has made clear he will not accept any limitation of production that would impede national reconstruction.
He insists too that any quota must take into account Iraq’s reserves. These are currently pegged at 115 billion barrels, ranking fourth after Saudi Arabia, Canada and Iran.
But industry analysts believe that Iraq is sitting on unexplored reserves that could double that total, eclipsing even the long-dominant Saudis.
On Jan. 29 Shahristani boasted in Baghdad: “We cannot find a reason to prevent Iraqi production from becoming higher than any other OPEC state, or even states outside OPEC. “We expect this to happen over the next six to seven years with coordination and agreement with other OPEC producers.”
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.