Iraq offers to lift crude supplies to India

Iraq offered to raise crude supplies to India as it is ramping up its crude oil production capacity substantially in the next few years and sought investment from Indian companies, India's oil ministry said.

Iraq's industry and mineral minister Fawzi F Hariri told Indian oil minister Murli Deora that companies investing in Iraq's refining sector would get an assured supply of crude oil, the oil ministry said in a statement on Wednesday.

State-run Indian Oil Corp is the country's biggest buyer of Iraqi crude, importing about 220,000 barrels per day from SOMO, IOC Chairman S. Behuria said.

Deora offered use of India's planned storage facilities to Hariri, and said he was interested in using it as a base to hold supplies that were then shipped elsewhere.

India is building 5 million tonnes of strategic crude oil storage at three locations in southern India, and the first storage of 1.33 million tonnes at Vishakapatnam will be built at Vizag in 2011.

Emerging from the shadow of war and keen to generate petrodollars to rebuild, Baghdad looks set to lift capacity to 12 million barrels per day in six or seven years, strengthening its hand for future negotiations on output quotas with OPEC.

In late January, Iraqi Oil Minister Hussain al-Shahristani said he expected Iraq to become the world's top oil producer in six to seven years, and that OPEC should take into account Iraq's need to rebuild its economy.

Unlike OPEC's 11 other members, Baghdad is not subject to the output targets the group uses to set supply levels. OPEC exempted Iraq in the 1990s, when it was under sanctions.