-Caveat Lector-
"OPEC, with the exception of Iraq, agreed to reduce oil supplies by more
than 5 million barrels a day in an effort to eliminate the glut (and raise
prices) worldwide."
I guess we'll just have to keep on bombing Iraq ...
Iraq To Develop Giant Oil Field
By LEON BARKHO
.c The Associated Press
BAGHDAD, Iraq (AP) -- Iraq, which is keen to raise its oil output, ordered
government engineers to start developing a giant oil field in the south to
add 80,000 barrels to daily production, state-run newspapers said Thursday.
Iraq's decision to use national resources to bring the Qurna field on stream
indicates the government does not expect Russian firms to work under their
1997 contract because of U.N. sanctions.
Qurna has estimated reserves of 15 billion and 30 billion barrels.
The announcement of plans to drill at Qurna came just two days after the
Iraqi Cabinet decided that the country should rely on its own resources to
boost oil output.
Iraq needs more production to take better advantage of a U.N.-approved
program that allows it to export $5.2 billion worth of oil each six months to
buy food and medicine. Iraqi sales have been far below the target.
Iraq currently produces 2.65 million barrels a day. The Oil Ministry goal is
to raise that to 3.5 million barrels during the year 2000.
Russia's largest oil company, LUKoil, and partners Zarubezhneft and
Mashinoimport have a deal to help develop Iraqi oil fields. They were
supposed to spend $200 million on development of Qurna, despite the U.N.
trade sanctions, Iraq says.
The government-run Al-Jumhuriya said Thursday that the state had begun work
on Qurna and that celebrations were held on the drilling site near the city
of Basra, 350 miles south of the capital Baghdad.
Rafid Dabouni, head of Southern Oil Company, told the newspaper that Iraq
aimed to extract 40,000 barrels a day from Qurna in the near future and boost
output to 80,000 barrels by the end of this year.
U.N. sanctions, imposed after Iraq's 1990 invasion of Kuwait, limit the sale
of oil and prohibit most other financial transactions with the country. The
oil-for-food program is a U.N.-approved exception.
Crude Oil Declines After US Gasoline Supplies Increase
London, June 3 (Bloomberg) -- Crude oil declined on concern peak U.S.
gasoline demand won't erode a surplus of the fuel, after the American
Petroleum Institute reported an increase in gasoline inventories for the week
ending May 28.
Gasoline inventories rose 2.32 million barrels to 222.3 million barrels, the
API said. The largest increase expected was 200,000 barrels, according to a
Bloomberg survey of analysts yesterday.
The rise in gasoline supplies ``wasn't exactly what people expected and could
pull prices down in early trade,'' said Tony Machacek, a broker with
Prudential Bache Futures Ltd.
Brent crude oil for July delivery declined as much as 13 cents to $14.75 a
barrel in early morning trading on the International Petroleum Exchange in
London. July crude oil on the New York Mercantile Exchange fell 12 cents from
yesterday's close to $16.53 a barrel in electronic trading.
Implied demand for gasoline, derived from figures in the API report, was
little changed at 8.73 million barrels a day, an increase of 116,000 barrels
a day.
The U.S. is the world's largest energy importer and consumer of oil and fuels
so changes in its supplies are used by traders as a barometer of global
demand. Current inventories show gasoline retailers are well supplied for the
key driving season between the Memorial Day May 31 and Labor day Sept. 6
holidays.
Crude Oil Inventories
Still, lower-than-expected gasoline demand could be offset by an unexpected
drop in U.S. crude oil inventories, which fell 1.5 million barrels, or 0.4
percent, to 330.9 million barrels during the week ended May 28, the API said.
Oil and gasoline prices are linked because oil is refined into fuels such as
gasoline.
``Inventories haven't fallen to a critically low level,'' said Machacek,
``but I suspect this will generate some support for oil prices and we could
see prices rally later in the day.''
Crude oil supplies are now 16.6 million barrels, or 4.8 percent, lower than a
year ago, signaling a plan by 14 global oil producers to reduce supplies is
holding together.
The Organization of Petroleum Exporting Countries made 91 percent of its
promised oil output cuts in May, as part of a wider effort to eliminate a
global surplus and lift prices, a Bloomberg survey showed.
Prices are up more than 45 percent since mid February on traders' speculation
that producers would succeed in reducing a surplus that sent oil prices to a
12-year low in December.
OPEC, with the exception of Iraq, and four other oil- producing nations
agreed to reduce oil supplies by more than 5 million barrels a day in a
series of agreements dating back to last year, in an effort to eliminate the
world glut.
Jun/03/1999 5:11
For more stories from Bloomberg News, click here.
(C) Copyright 1999 Bloomberg L.P.
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