Dubai (Platts)--2Oct2012/901 am EDT/1301 GMT

Iraq is aiming to raise crude oil production to 3.4 million b/d and exports to 2.6 million b/d by the end of this year, Thamir Ghadhban, chairman of the prime minister's advisory committee, said Tuesday.

Output in 2013 will average 3.5 million-3.6 million b/d, with exports rising to an average of 2.9 million b/d, he told reporters on the sidelines of the CWC Iraq Megaprojects Conference in Dubai.

In 2014, Iraq's average oil production is expected to surpass an average 4 million b/d, Ghadhban said.

The government foresees annual production capacity increments of 500,000-700,000 b/d in the coming years, with a consensus that 9 million b/d of capacity will be reached in 2017, he said.

"We are talking about eight-and-a-half to nine [million b/d], to be discussed thoroughly and a decision to be taken. Nobody is talking about six or 12 [million b/d]" Ghadhban elaborated.

The government's most recent energy strategy scenarios set 2020 for the production capacity target to be reached, but Baghdad's expectation was that it would be reached three years earlier, he added.

Ghadhban told conference delegates the 9 million b/d capacity target would include a certain amount of spare production capacity to give Iraq some flexibility over its exports.

The figure of 9 million b/d is below the original target of more than 13 million b/d that Iraq said would be reached by 2017 when it awarded long-term service contracts for development or further development of major oil fields in 2009 and 2010.

On the conference sidelines, Ghadhban put 12 million b/d as the total production capacity that would be reached if all international oil companies currently developing Iraqi oil fields met their contractual obligations.

Iraqi oil minister Abdul Karim al-Luaibi said Sunday that oil production had risen above 3.3 million b/d and exports exceeded 2.6 million b/d.

Further increments to both production and exports are expected as infrastructure developments and the expansion of export capacity are completed.

Ghadhban told delegates that Baghdad had agreed to transfer $1 billion to the Kurdistan Regional Government in "advance payments" for oil contributions to Iraq's federal export system from the semi-autonomous region of northeastern Iraq.

Under the deal reached earlier in September, Kurdish crude exports would be increased to 200,000 b/d in the near future from 140,000 b/d in mid-September, and KRG payments to international oil companies operating in their territory would be audited, he added.

Ghadhban told reporters that Baghdad would transfer the promised payments to the KRG in two installments, of $650 million and $350 million respectively, by the end of 2012. He was unclear on whether the first installment had been paid.

The KRG suspended Kurdish oil exports from April 1 to August 7, 2012, due to a dispute with Baghdad over payments to foreign oil producers. The new deal was reached after the KRG resumed a limited export flow in what it termed a goodwill gesture.

At the same time, Iraqi parliamentary officials and KRG representatives resumed talks aimed at restarting long-stalled multi-party negotiations over passing a new federal oil and gas law.

Ghadhban said a committee formed to produce a new draft of the long-awaited law for presentation to parliament had agreed to use a draft submitted several months ago by Iraq's Council of Ministers as the basis for discussions.

That draft, which proposes a high degree of central government control of Iraqi oil and gas production and exports and would also centralize energy policy, had previously been rejected by the KRG and Kurdish members of Iraq's parliament.

Ghadhban declined to comment on the potential outcome of an OPEC ministerial decision on the appointment of the organization's next secretary general.

The former Iraqi oil minister has been put forward as one of four candidates for the post.

An OPEC committee would interview the candidates October 22-24 and a decision would be taken at the next ministerial meeting, scheduled for mid-December, he said.

Ghadhban also declined to predict when Iraq would return to the OPEC production quota system from which it was exempted following the 2003 US invasion of Iraq.

"We are not in a hurry, but this is very much subject to agreement and talk between us and our colleagues within OPEC. It is not an issue right now," he told reporters.

--Tamsin Carlisle, tamsin_carlisle@platts.com
--Ben Lando, newsdesk@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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