Price windfall boosts Iraq’s oil revenue by 34 pct

BAGHDAD (Reuters) – Higher oil prices helped Iraq earn $34.1 billion in oil revenue in the first five months of this year, an increase of $8.7 billion, or 34 percent, over budgeted revenue, Deputy Prime Minister Hussain al-Shahristani said Tuesday.

With Iraqi oil production and exports steadily rising, government officials say they expect the windfall oil revenue to cover a budget deficit of $13.4 billion projected in 2011.

In February, Iraq’s parliament approved an $82.6 billion budget for 2011 based on an average oil price of $76.50 per barrel and 2.2 million barrels per day in crude exports.

Shahristani, appearing with Prime Minister Nuri al-Maliki and the rest of the cabinet on national television, said the price for Iraqi oil had averaged $103.60 per barrel in the first five months of the year.

“This means that there is a surplus in the first five months of $8.7 billion,” he said, adding this represented a 34 percent increase over the originally budgeted $25.4 billion in revenue for the period.

Shahristani and Maliki were reporting on the government performance over a 100-day period the prime minister had set for his cross-sectarian cabinet to try to improve public services in the face of popular protests against poor living conditions and corruption in the war-battered OPEC producer.

Iraq is starved of investment and the process of rebuilding a nation still emerging from years of conflict triggered by the 2003 U.S.-led invasion that toppled Saddam Hussein has been slow. Oil accounts for more than 95 percent of state revenues.

Shahristani, who is responsible for Iraq’s energy affairs and at the weekend toured oil export facilities in the south of the country, said he expected the price of Iraq’s oil to remain at higher-than-expected levels for the rest of the year.

Finance Minister Rafie al-Esawi said last month that Iraq’s 2012 budget forecast spending of 115 trillion dinars ($98.45 billion) and would be based on a projected oil price of $85 a barrel.

The Iraqi central bank has said it expects Iraq’s gross domestic product excluding its key oil sector to grow by 6 percent in 2011. If oil is included, GDP for this year is expected to reach 12 percent, the bank says, and it plans to try to maintain this level of growth in 2012.

Iraq has set itself a goal of increasing oil production capacity to 12 million barrels per day by 2017 from between 2.6 million bpd to 2.7 million bpd currently. However, Oil Minister Abdul-Kareem Luaibi said Tuesday this ambitious objective might be cut back. (Reporting by Waleed Ibrahim; Writing by Pascal Fletcher; Editing by Dan Grebler)