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Turkey backs Iraq on oil after Kurdish vote
The government of Turkey said it will deal exclusively with the
Iraqi government on oil exports after voters in the semiautonomous Kurdistan Region of Iraq supported independence in a
Assurance from Turkish Prime Minister Binali Yildirim of
support for Baghdad followed threats before the vote to close
the pipeline that carries crude oil from Iraqi Kurdistan across
Turkey to Ceyhan on the Mediterranean.
About 72% of eligible voters participated in the Sept. 25 referendum, which supported negotiations leading to separation
from Iraq by nearly 93%.
Yildirim told Iraqi Prime Minister Haidar al-Abadi in a Sept.
28 telephone conversation that Turkey would deal only with
Iraq on exports and that Iraq had “support of his country for all
decisions,” according to press reports.
Shutdown of the pipeline across Turkey would block shipment of as much as 650,000 b/d of crude, sales of which are
crucial to Iraqi Kurdistan.
The Kurdish Regional Government, debts of which have
grown to an estimated $20 billion during the 3-year slump in
crude-oil prices, lists the absence of revenue-sharing promised
in the Iraqi constitution among its grievances against Baghdad.
Meanwhile, the Iraqi parliament on Sept. 27 said Abadi
should use military force to reclaim the region around giant
Kirkuk oil field in northern Iraq.
Kurdish Peshmerga forces have controlled the city of Kirkuk
and surrounding areas since 2014, when they defeated Islamic
State insurgents after soldiers of the Iraqi military fled.
The Iraqi segment of the northern export pipeline between
Kirkuk and the Turkish border is idle. But two other pipelines
now connect Kurdish oil fields with the pipeline at Fishkhabur
on the border.
Turkey and the central Iraqi government were joined in their
opposition to the referendum by Iran. Turkey and Iran have
large Kurdish populations and histories of clashes with Kurdish militants.
The US and United Nations also opposed the referendum.
Fitch: Lower costs, US shale likely to limit oil prices
Lower world production costs, US shale growth potential, and
shale producers’ ability to quickly respond to changing market
conditions likely will keep average annual oil prices below $60/
bbl for the long term, Fitch Ratings of Chicago said.
But Fitch analysts noted oil prices remain volatile and could
periodically exceed their assumptions.
“We have updated our base-case price assumptions to re-
flect the limited upside for prices in the long term,” Fitch said.
“We have also reduced our UK National Balancing Point gas
price assumptions due to our updated oil price assumptions
and an expectation that global liquefied natural gas capacity
additions will probably result in a supply surplus.”
The US Lower 48 land rig count has risen around 45% since
Dec. 31, 2016, contributing to a rebound in US crude produc-
tion of more than 9. 5 million b/d from a trough of about 8. 4
million b/d in July 2016, Fitch said.
“We continue to expect US production growth to remain robust in the second half of 2017 based on the roughly 2-4-month
lag between spudding shale wells and production,” Fitch said,
adding its analysts remain skeptical about the effectiveness of
the Organization of Petroleum Exporting Countries produc-tion-cut targets. Lower production compared with October
2016 is intended to rebalance supply and demand in the near
Fitch noted Libya and Nigeria are exempt from the produc-tion-cut targets of 1.2 million b/d by OPEC members. Analysts
said Libya and Nigeria both are producing at higher levels since
the targets were implemented in January.
Other obstacles include weak enforceability and OPEC’s
poor adherence track record, Fitch said. OPEC’s average compliance rate slipped to 75% in July from almost 100% at the beginning of the year, the International Energy Agency estimates.
OPEC compliance improved to an estimated 82% in August,
but overall Fitch expects average compliance rates in the second
half of 2017 and beyond will be weaker than in the first half.
Wirth to succeed Watson as Chevron chairman, CEO
Michael K. Wirth has been elected chairman and chief executive
officer of Chevron Corp., effective Feb. 1. He will succeed John S.
Watson, who will retire from the company and its board after 37
years of service, including 8 years as chairman and CEO.