Iraq's reconstituted national oil company Inoc will be operational by early 2022, more than 30 years after it was broken up under Saddam Hussein's regime, according to oil minister Ihsan Ismael.
"By the third quarter of 2021 or first quarter of 2022, we will see Inoc leading the upstream industry in Iraq," Ismael told the Iraq Petroleum virtual conference today. Inoc's revival will be "positive" for the sector as a whole, including international oil firms operating in the country, as it will help speed up and facilitate processes, Ismael said.
Iraq's parliament has yet to approve an amended law to re-establish the firm, but Ismael has taken on the role of heading Inoc in addition to his existing duties as oil minister. Inoc was broken up into a number of regional companies by Saddam Hussein's regime in 1987 as a way of increasing direct government control over the oil industry. These regional firms have since operated under the umbrella of the oil ministry.
Parliament voted in March 2018 to re-establish Inoc amid tensions between Baghdad and the Kurdistan Regional Government (KRG) over the federal budget. But Iraq's federal supreme court ruled in January last year that a number of articles of the law to revive the national oil company were unconstitutional. These related to revenues, profits, distribution and provincial rights.
The oil ministry is in discussions with a consultancy about the scope of Inoc's authority, and there is a change in the law to make it workable, Ismael said. Inoc will function as a single entity separate from the oil ministry and will oversee all of Iraq's oil-producing regions, including the semi-autonomous Kurdistan region in the north of the country. Its advocates say it will smooth the relationship between federal and local governments by separating the oil sector from political influence and by ensuring the fair distribution of wealth among Iraqi constituencies, which have competing demands.
Tension between Baghdad and Erbil has deteriorated recently over Opec+ crude production cuts and budget allocations. The division of Iraq's cuts under the latest Opec+ agreement was "not done properly", Ismael said. Baghdad has cut around 1mn b/d of crude output from southern regions including Basrah and Nasiriya, and around 100,000 b/d from Kirkuk in northern Iraq, but there has been "no real cut" from the Kurdistan region, Ismael said.
Under the Opec+ agreement, Iraq pledged to reduce its crude production by 1.06mn b/d in May-July and by 849,000 b/d in August-December from an October 2018 baseline of 4.65mn b/d.
