* China seeks 850,000 bpd of Iraqi crude for 2014 - Iraq min
* Iraq sees 4th crude export terminal to start by end-Q1,
* Total export capacity to reach 4 mln bpd
* OPEC members should accommodate any return of Iran to mkt
(Recasts, adds comments on China seeking to boost purchases)
By Meeyoung Cho and Jane Chung
DAEGU, South Korea, Oct 16 Iraq said China is
seeking to increase purchases of its crude by more than
two-thirds next year, stepping up the rivalry between Baghdad
and top exporter Saudi Arabia for a bigger slice of the growing
Rapid increases in Iraq's oil output after years of unrest
have helped cushion oil markets from wide price swings as
shipments from OPEC-member Iran were halved due to tightening
Western sanctions amid unstable output from other exporters such
as Libya and Sudan.
Iraq has provided crucial supplies, giving consumers another
option besides Saudi Arabia as the main alternative exporter.
"Iraq is in a lucky position because we always get more
requests than we can actually supply," deputy prime minister for
energy Hussain Al-Shahristani said on Wednesday at the World
Energy Congress in South Korea.
China is seeking 850,000 barrels per day (bpd) of crude from
Iraq next year, Al-Shahristani said, significantly narrowing the
gap between Iraqi and Saudi Arabian exports. The energy minister
also said he expects more requests for 2014 supply from China.
Saudi Arabia shipped 1.08 million bpd of crude to China in
the first eight months of this year, while Baghdad has an annual
term deal to sell about 500,000 bpd into China this year.
It was not immediately clear which Chinese oil companies
were seeking the additional volumes. But a rapid increase in
China's refining capacity over the past few years means it is
reasonable to expect it to seek a quantum jump in purchases.
"An increase of 300,00 bpd is quite reasonable. Sinochem
could raise its crude purchase from Iraq for its newly-built
refinery in Quanzhou," said a senior Chinese crude oil trader.
"Other companies such as Sinopec may also raise imports from
Iraq. China will absorb the increase of Iraqi crude exports."
RAISING EXPORT CAPACITY
Iraq is set to expand its oil export capacity and is wooing
Asian customers by offering easier payment terms as it ramps up
output, countering infrastructure and security issues that have
this year hampered the Middle Eastern nation's efforts to
maintain steady output and exports.
The country is planning to raise its total export capacity
to 4 million bpd, Al-Shahristani had said earlier on the
sidelines of the conference in South Korea.
"By the end of the first quarter we should have (the
additional capacity," he said.
Iraq's current crude output is now back up to 3.3 million
bpd, and may touch 3.5 million bpd by year-end.
The Middle Eastern nation is exporting 2.5 million bpd, 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.
One topic of discussion in Vienna, however, may be on how to
make room for any resurgence of Iranian exports.
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.
(Additional reporting by Florence Tan in DAEGU and Judy Hua in
BEIJING; Editing by Manash Goswami and Tom Hogue)