DAEGU, South Korea: Iraq is set to boost its oil export capacity significantly by the end of the first quarter next year, stepping up competition with top exporter Saudi Arabia to grab a bigger share of the growing Asian market.
Iraq is wooing Asian customers by offering easier payment terms to secure buyers as it ramps up oil output after years of war, but inadequate infrastructure and security issues this year have hampered the Middle Eastern nations' efforts to maintain steady output and exports.
The country is planning to raise its total export capacity to 4 million barrels per day (bpd), deputy prime minister for energy Hussain Al-Shahristani said on Wednesday.
"In total, we will be having capacity of 4 million barrels (per day) next year," he said on the sidelines of the World Energy Congress in South Korea. "By the end of the first quarter we should have them."
Iraq's current oil output is now back up to 3.3 million bpd of crude, and may touch 3.5 million bpd by year-end. The Middle Eastern nation is exporting 2.5 million bpd of its output, with 60 percent going to Asia, 20 percent to the American market and the rest to Europe, he said.
But Iraq may not use the country's export capacity to its full potential and may instead work on upgrading some of the older export facilities, the minister said.
"We will be taking some of our old terminal for upgrading because we don't (currently) need them," he said.
Iraq's total storage capacity has been recently raised to more than 7 million barrels, he also said.
Iraq's terminal upgrading activity this year and other work to improve its export capacity have sharply reduced it exports in some months this year.
Exports fell to 2 million bpd in September, the lowest rate in 19 months, as the terminal repair and expansion work reduced shipments of Basra Light crude, which accounts for most of Baghdad's export revenue.
Asked whether OPEC members will discuss a change in production targets in December, Al-Shahristani said: "The world is satisfied with current OPEC production. We don't see any reason to change the production target."
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, meets on Dec. 4 in Vienna to decide whether to adjust its output target.
OPEC again lowered the forecast demand for its crude in the fourth quarter and 2014 in a monthly report on Oct. 10, saying its production remained higher than next year's demand for its oil despite a plunge in Iraqi and Libyan output.
If the United States and the European Union begin to ease their sanctions on Iran as talks progress over Tehran's disputed nuclear programme, it is the OPEC members, excluding Iraq, that will have to make way for increased output and exports of Iranian crude, Al-Shahristani said.
"It is Iran's right to produce its quota under OPEC agreement. Iraq is exempted from any quota levels. Obviously the countries that have been producing at Iran's expense will have to accommodate the return of Iran to the market," he said.
The U.S. and EU sanctions have cut Iran's exports in half, cost it billions of dollars a month in lost revenue, weakened its currency and crippled its economy. The European Union and the United States believe Iran is developing nuclear weapons, while Tehran says its programme is for power generation.
The election of moderate reformer Hassan Rouhani to Iran's presidency in June raised hopes in the West that Iran is finally ready to strike a deal.
Iran outlined a proposal to world powers on Tuesday on resolving the decade-old standoff over its nuclear programme, but both sides at the talks in Geneva warned it was too early to say if a breakthrough was within reach.