Iraq has asked oil companies to resume operations in the Iraqi Kurdistan region from Thursday, the first significant step towards stepping up production since the Iran war began.
Some oil and gas companies operating in the semi-autonomous Kurdistan region stopped production due to drone attacks on their energy infrastructure.
Iraqi Prime Minister Ali Al Zaidi, who met officials from the Kurdistan Regional Government and international oil company executives on Wednesday, “directed oil companies operating in the Kurdistan Region of Iraq to resume their activities starting tomorrow [Thursday]", his media office said on Wednesday.
He emphasised “the importance of joint action, and the provision of an appropriate operating environment and essential requirements to support their work”.
Mr Al Zaidi – a businessman sworn in as Prime Minister last month – was briefed on the operating conditions in Iraqi Kurdistan during the conflict and plans for resuming activity as soon as possible.
“The damage sustained by Iraq as a result of the disruption of oil exports through the Strait of Hormuz had been significant, underscoring the need to intensify efforts to offset those losses by addressing the challenges hindering increased production,” his media office added.
Iraq's key oil industry funds 90 per cent of Baghdad's income.
Mr Al Zaidi inherited an economy in free fall, with the Iran war and subsequent oil supply collapse, as well as Washington's pressure on Baghdad, exacerbating long-delayed structural reforms.
The International Monetary Fund's April regional outlook forecast Iraq's economy will contract by 6.8 per cent this year, a downwards revision of more than 10 percentage points from the October forecast – the steepest drop among directly affected oil exporters in the region.
Iraq's oil revenue has declined sharply since the war began on February 28. Baghdad's monthly figure dropped from $6.8 billion in February to $1.96 billion the following month, according to Iraqi sources.
Baghdad exported 3.5 million barrels per day before the war and, during the war, transported between 200,00 bpd and 300,000 bpd through the Kurdistan-Ceyhan pipeline, its only viable export route.
Iraq is also exploring alternative routes to export crude. The Oil Ministry said last month it had started work on a 700km pipeline linking the oil-rich Basra province in the south to Haditha in western Iraq, with a capacity of 2.5 million bpd.
About $1.5 billion has been allocated for the project, while the date of completion depends on the availability of further budget allocations. In addition to supplying refineries across southern, central and northern Iraq, the pipeline will pump crude for export through the ports of Baniyas in Syria, Ceyhan in Turkey and Aqaba in Jordan.
