* Iraq boosts February exports to 35-year high
* Oil execs say more Iraqi growth possible in 2014
* OPEC delegates relaxed, for now, about extra Iraqi oil
By Alex Lawler and Peg Mackey
LONDON, March 5 Iraq is reclaiming its rank as
the world's fastest-growing oil exporter, cushioning consumers
from Libyan supply outages for now and, perhaps, reviving OPEC
market share rivalries down the road.
Despite worsening violence due to spillover from the war in
Syria, Iraq - already OPEC's second-largest producer - is likely
to post one of the biggest annual output jumps in its history as
BP, Exxon Mobil and other companies tap its
southern fields, which are untouched by the unrest.
With many export bottlenecks now cleared at the southern
Basra terminals - from which almost all of Iraq's crude is
shipped - Baghdad is expected to keep up, or even exceed, the
rapid pace of oil sales reached in February - at 2.8 million
barrels per day (bpd), a 500,000 bpd rise on the previous month.
"Iraq is doing its best to export as much as possible and
directionally things are improving," said a senior oil executive
from a major oil company at work in Iraq.
So much so that, after momentum slowed last year, many in
the industry expect a significant increase in 2014 from the
country that holds the world's fifth-biggest oil reserves.
"We think the average for the year is probably going to be
about 2.9 million bpd, so maybe in the latter part of the year
there will be a little bit more than that," said a Western oil
executive from another company working in Iraq.
If Baghdad can sustain oil sales of 2.8 million bpd, its
revenue could swell to more than $100 billion at $100-a-barrel
oil. Average exports of just under 2.4 million bpd last year
earned Iraq $89 billion.
So far, the leap in Iraqi shipments has yet to weigh on oil
prices and is being welcomed by other members of the
Organization of the Petroleum Exporting Countries (OPEC), as it
is making up for outages in Libya and reduced exports from Iran
due to Western sanctions.
"As long as Brent is $100-$110 there is no problem
for OPEC and the higher volumes from Iraq are welcome," said a
Gulf OPEC delegate. "Their crude is required."
Another delegate agreed, while indicating that view could
change should output recover elsewhere.
"When the situation is settled in Libya with production of
1.5 million barrels per day and Iranian crude comes back, it
will have an impact on prices. But not now."
The world's leading oil companies have been expanding Iraq's
giant southern fields - Rumaila led by BP, West Qurna-1 run by
Exxon and Zubair operated by Eni - since 2010 when they
signed a series of service contracts with Baghdad.
That revival, now into its fifth year, prompted Iraq to set
an export target of 3.4 million bpd for 2014, including 400,000
bpd from the Kurdistan region, implying output of 4 million bpd,
including oil used internally.
Oil experts still see that as optimistic. But growth is
returning thanks to the expanded capacity at Basra and further
rises from the southern fields of Majnoon, led by Shell, and
Halfaya, where PetroChina is the operator.
The imminent start-up of West Qurna-2, operated by Lukoil,
should boost flows further. The field is considered the world's
second-largest untapped deposit.
Momentum in Iraq's oil growth slowed last year due to
technical and security problems as well as a row between Baghdad
and the autonomous Kurdish north. These factors could still keep
the expansion in check.
The Kurds, at odds with the Iraqi central government over
oil rights, stopped exporting via the national network more than
a year ago. A pipeline running from Iraq's northern oilfields to
Turkey is repeatedly sabotaged, disrupting exports.
Rising violence has not hit operations in the south, but
Western companies at work there say deteriorating security and
the distraction of end-April elections may be slowing crucial
Last year was Iraq's bloodiest since sectarian violence
began to abate in 2008, with nearly 8,000 civilians killed. More
than 700 people died in violence in Iraq in February, the United
Nations said last week.
Iraq's production last year ran at around 3 million bpd, up
a touch on 2012. The slowdown in Iraq, plus disruption in Libyan
supply and Iranian sanctions, allowed other OPEC members -
chiefly Saudi Arabia, Kuwait and the United Arab Emirates - to
avoid large cutbacks in output.
OPEC has for years been able to defer difficult issues over
how it divides production, as oil prices have stayed high.
Officials' relaxed view of Iraqi growth is likely to change if
and when Libya and Iran return.
"Iraqi production did not really grow last year but they
seem to be making some sort of headway this year," said an OPEC
source. "With Iraq increasing, there are issues in terms of who
might have to cut back."
(Editing by Jason Neely)