Western oilmen in Iraq brace for Syria backlash

Nothing broken, but I must disagree, at the very least, with the following: 1. There are around 1bn shares in issue when fully diluted inc conversion of bonds, not 876m. The bond holders can force conversion on takeover. 2. Do you really expect a recovery rate of 35% within the 25+5 year PSCs?? Even on Shaikan this is unrealistic assuming that currently stated targets are met. Hitting 400k bopd within 9 years with no decline rate thereafter will only get you 27% (450k with no decline rate is 31%) and even my alternatives make assumptions that we PIs cannot make yet. Why not just start with 20% and move it up as and when proven? On AB and SA, I would say that 35% is likely to be wildly inaccurate at this stage, as the recovery factor is totally unproven and the wells in these fields are not producing good volumes at the moment. 3. You use a discount rate that appears to be around 8%. In my view, anything under 10% is unrealistic to 'expect' at present. It is possible, but not something I would 'assume'. Even 10% is not a conservative view, though it is one I would accept as fair. GKP are funding Shaikan at a coupon rate of up to 6.5% which is then dilutable in addition. You leave no room in your discount factor for risk etc. 4. It is too early to place significant value on the gas. 5. One could also question your assumption of $100 / bbl. Brent has averaged $105 or so over the last 3 years. Most people expect a discount of $10-$20 on Brent for Shaikan's heavy oil. So I would use no more than $90 at present. Yes, oil may go up, but you make no equivalent accommodation for inflation in your discount factor. Yes, SH7 may change matters, but that is the possible future and is totally unquantifiable at the moment. The point that I am trying to make, is that, in my view, some of your assumptions are incorrect and some are at the very top end of expectations even if you are right. GKP may well be presented with a fait accompli(An accomplished, presumably irreversible deed or fact. -------------------------------------------------------------------------------- ) by the KRG. To assume that top dollar and maximum assumptions will be paid is just not viable to assume at present. We cannot even say that there will even be an auction / fair price paid at the moment. There might be. But we cannot assume it and GKP are not in a position of strength. Thanks all for the responses. Welshki's questions of me seem to be popular ones judging by the number of tick ups, so here is my response to question about why Dalesman's valuation is so different to my range - although the very top end of my range is not far off his. I only draw 3 differences to your attention there are many more. 1. Dalesman's OIP on his spreadsheet screenshot for Shaikan has 18.7bn barrels yet the P50 is 13.7bn barrels and the P10 is 15bn barrels. 18.7bn barrels may (or may not) be possible in the future, however it is does not reflect what GKP have proven as of today. Yes there might be 37% more oil found at Shaikan. But then again there might not be. And even if it is, what can be recovered in the license period? I prefer to count only the chickens that have hatched and that I can fit into my bag, to take them away. 2. Dalesman's discount rate is 6.5%, yet he acknowledges that "The Americans [use] upwards of 10%. This is the way they value Oil Cos". I think there is a strong possibility of the buyer of Shaikan being American. So the base case should surely be 10% not 6.5%? I add that the discount rate has the most severe of all the variables upon the end result. 3. Dalesman's screenshot shows 4.46bn boe being recovered from Shaikan (or 3.98bn barrels excluding gas). This is equivalent to: (a) a 32% recovery rate of the current P50 OIP in just 30 years and is far greater than that cumulatively thereafter (though Dalesman uses a different OIP as you know, which would lower the recovery rate); or (b) production of 480k bopd from Year 10 with no decline rate even by the end of the 30 year PSC period. Though not impossible, this is totally unproven. It also far exceeds all seven possible scenarios set out in the paid for by GKP Edison note, which vary from 2.48bn - 3.30bn bbls recovered in the PSC period. In conclusion, the point that I made in my post yesterday remains. One can come up with a whole host of valuations for Shaikan. But I think that range starts far, far lower than Dalesman's valuation, which is in my view is not conservative. In addition, I prefer to assess the value of Shaikan based upon what can be shown to be likely recovered (on present information) during the PSC term. sicilian_kan ===== Hi JD, thanks for your questions. My NAV spreadsheet was designed to see what GKP would extract during the PSC term and to value it on a discounted basis. What GKP can extract during the finite PSC period is to me the most important factor. What is left over at the end of the PSC GKP will not get. The purpose of the OIP figure in the spreadsheet is that it shows you in cell C33 what % you have recovered of the OIP during the PSC period. It is effectively a cross-referencer to make sure that one does not put in figures that are unrealistic or over ambitious. I.e. if your inputs showed a recovery rate of 40% during the 30 year PSC term, that might ring alarm bells. Of course if the OIP increases due to SH7 or any other drilling, just input a higher recoverable figure or a longer plateau period and bump up the OIP figure so the recovery % during the PSC term is reduced accordingly. But it is the bopd produced, the plateau length and the decline period, not the OIP, that lead directly to the true value of the PSC. Plus, if the OIP were to be the controller, not the above. Then there would have to be a formula to automatically adjust the bopd produced, the plateau length, the decline rate etc. This would be both questionable in terms of accuracy and also arbitrary. Hope this makes things clearer. sicilian_kan === It's fair to say that there are a few stocks out there that carry less political/regional risk and similar upside potential to GKP in terms of a 2, 3, 4, or 5 bagger. After years of a sector slump - many of the miners and commodity small caps are beginning to spring into life with the usual bonkers 50%+ or 120% one day rises. But these stocks stand as much chance as rising 150% as they do falling the same amount a week later. Of course there are others which are not so volatile but you get the idea. As for GKP - against a sector slump, the stock is actually trading higher than many of it's peers on a YoY basis. There is no harm in lowering expectations - as it bodes well for surprises. But you have to remember that the market was fooled by a £8 offer via Exxon at a time when the sp was sub 200p. At a time when the cc was still at large. And at a time when FDP was a year away etc etc. In my experience - you can't con a con artist. So somewhere in that dreamy 2012 period - the city and everyone else involved were convinced an £8 offer was possible. And that's your benchmark imho. Forget your calcs and assumptions. Especially if you are gonna throw in AB, SA and BB for the next man. I mean - that's just stoopid. Then there's SH-7. You can't just step over that one without realising the significance. Finally - I think in 15 years time the oil price is likely to be nearer $150pb and that's cheap. Opec have a habit of making sure the stuff sells at a decent price these days. The dummy run has been done already. It got the sp to 450p+ and the rumour was a soft one. Should such a rumour occur today - then I think most would give it more creditability. And with that, 450p+ could be surpassed with ease. That said - there comes a point when a 45 bagger for some becomes a 2 or 3 bagger for others. And at 450p a share - there will be some investors that will fancy their chances at finding another 2 bagger or 3 bagger out there rather than pin the hopes on a £10 per share GKP exit. But that's in the future and I guess we can all take a view at the next rumour when it arrives and judge it for what it is. Markets are notoriously fickle and once one uncertainty is removed - they tend to create or turn to another one. Due to the CC, shareholders have been kept in the dark on many matters including the finer details on the FDP. Investors have to realise that although the oil reserves are likely to be large (as we know) it's the production and exporting of that oil that matters most. DNO and GENEL are both near highs because the 'business model' of producing oil and getting paid for it - is working. GKP however, are yet to provide any detail on how they plan to fund the Shaikan development in a way that covers all bases and eventualities. You can't just rely on cash flow from production to develop the field. What happens if Erbil/Baghdad continue to fail on agreeing exports / deals etc? The ops update (next thursday) is much awaited but so are the numbers on the interims (up to July 31st). These numbers wil show the cash burn and what's left in the kitty. GKP management team know that they will need to have a firm guide / plan in place to reveal to all regarding the questions on funding/cash flow etc. It's more than possible that GKP could announce on thursday 3 things or 4 things. 1. Interims 2. Ops update 3. AB sale or 4. More CB's issued. 5. Possible Share placing The latter could be small but depending on price might certainly help out a few of the CB hedges assuming they wish to close out etc. Tepid= 1. Moderately warm; lukewarm. 2. Lacking in emotional warmth or enthusiasm; halfhearted: There are no more excuses going forward from here on. No more news black outs or CC's to blame for tepid shareholder coms. As many know with explorers, it's a constant battle of operations vs funding and it usually springs into the markets focus on an annual basis. Historically GKP have funded around the Q3 period in most cases. And before someone says something stoopid like 'Ewan said that there would be no more dilution' blah blah blah etc may I remind people of the Sept interims in 2011 (or was it 2010) when management also said that they did not plan any placings and then 2 weeks later we had one at 140p lol! It's managements perogative to change their minds and what they say one day may indeed be true - but events often change ones views and in the oil industry if you want something, then you best act like you don't need it, if you want to get a decent price. I'm looking forward to hearing GKP's plans for the next 12 months which should update on last years plans. I think next thursday could be a busy day on the BB. It's all go now. HUB All the best HUB === I've read lots of comments here about why the price hasn't soared on this news. The first point that I wish to make is the share price HAS soared on this news. The sp has gone from sub £1.30 to £2.40 in under three months. Largely, but not entirely, due to two things. (1) An improvement in CG; and (2) Anticipation of the impending judgment in the court case. That is around a 90% increase on the back of these two events. Now I have yet to meet a GKP shareholder who thought that Excalibur would win. So why did people expect a massive rise? Victory was already priced in was it not? There was also a Brucie bonus of 175p to 240p, starting just 5 trading days before the court case result, or an increase of 37%. In addition, look at the fall on the news of the Excalibur suit however many years ago. Ignore the noise intra day. The close the day before was 184.5p. The close after the news broke and before people had identified all the weaknesses of the Excalibur case was 167.5p. A fall of just 9% being factored into the share price at the time. And the sp only closed below that price over a month later. It just is not the case that a 50% rise was needed to make up for the fall. The second point that I wish to make is to ask you all to assess the current NAV of Shaikan. I put up here my NAV calculator some time ago. I can come up with two very different scenarios. I do not suggest either are right. They are just at different ends of the spectrum: Scenario A - Oil Price $90 Average Oil Price Increase 2% Years to Plateau 8 Plateau Level 400,000 Plateau Length 9 (i.e. no decline until Year 17) Decline Rate 5% OiP 13.5bn Discount Rate 10% = Recovery during the lifetime of the PSC = 3.2 bn barrels or a respectable 23.91% Still producing 195k bopd after 30 year PSC ended so that recovery rate will rise over the life of the field. NAV = £2.90 per share Scenario B - Oil Price $100 Average Oil Price Increase 3% Years to Plateau 10 Plateau Level 500,000 Plateau Length 10 (i.e. no decline until Year 20) Decline Rate 5% OiP 13.5bn Discount Rate 6% = Recovery during the lifetime of the PSC = 4.1 bn barrels or 30.52% Still producing 284k bopd after 30 year PSC ended NAV = £7.34 per share I do not think this latter scenario realistic at present as this has not been proven up. But let's assume it to be the case. Even this scenario is highly sensitive to the oil price and the discount rate. - Switch the annual oil price increase to 2% from 3% and £7.34 NAV falls to £6.44. - Much more importantly, switch the discount rate from 6% to 10% and the £6.44 NAV falls to £3.76 per share. Then we have to leave something in for the next man. AB, SA, BB and SH7 at present would suffice. Plus we must bear in mind that the politics is not yet sorted and that GKP has not yet proven itself to be able to produce on time or on target. We must also bear in mind that there is a possibility left open of a sale of Shaikan rather than GKP, which brings an extra level of risk assessment in as that would bring in a lower price for Shaikan (as something would need to be built in for the next man beyond SH7 and some flanks). In addition, some of those monies will be re-invested in other GKP projects and will not hit shareholders pockets directly and of those that do, receiving a dividend will not bump up the sp as much as sale for tax reasons . You can probably see where I am heading. It is this. The share price at the moment, in my view, 'more than fairly' reflects the current state of play at GKP, taking conservative (and not top end) figures as the basis of my calculations. Unfortunately for me, it has taken me a long time to realise this. Knowing what I do now, I probably would still have got caught up in the bid hype of last year, but I equally now know that I would have sold on the way down, as many wiser than me did. YES, there is huge potential here. YES, there may be a takeover of a sizeable amount, significantly in excess of where we are now. BUT, I no longer believe that the bid will likely be in the region of £8, even if that is possible. I also believe that shareholders may price themselves out of a takeover and that GKP will not get to its targets on time; OR that shareholders will end up disappointed by the end price (even if higher than now). I also believe that GKP is in a difficult position with auctioning as KRG national interests can trump any sale attempt by GKP in the PSC. In short, I don't think that the court case resolution has done anything to suggest that the status quo (which I have not long realised) has changed - i.e. anything below £1.50 is likely to be a good buy, anything between £1.50 and £2.00 has a good chance of being a good buy at some point, and anything over £2 carries significant risk. The resolution of the politics / completion and activation of the pipeline may change this, but STEAM has been delayed so I do not expect imminent progress on this front, even though I expect resolution, one way or another, in due course. Even so, if I can still get £2.90 to £7.44 on my NAV calculator for a range of variables on Shaikan, then EVEN IF the politics ARE resolved I'm not going to go much higher than £2 for my buys in order to avoid putting my capital at risk. There are many other shares with in my view lower downsides than GKP's but still with 1-5 bagger potential. Each to their own. I've staked out my views here now. I wish all holders well and for a stonkingly big takeover. I fully expect the responses to range from the rational and intelligent to the delusional and ignorant. But nevertheless, all views are welcome. I would like to be persuaded to change my mind. My NAV spreadsheet was designed to see what GKP would extract during the PSC term and to value it on a discounted basis. What GKP can extract during the finite PSC period is to me the most important factor. What is left over at the end of the PSC GKP will not get. ============ Anyone that thought that these were going to go up, stay up, and not come back a bit, obviously don't know GKP very well. We are one of the most popular shares with PI's, and we are on AIM. Who can blame traders or MM's or large investors or anyone else from making money either short or long? That is the name of the game. I am pretty disappointed that the SP is where it is, as I'm sure most others are, BUT, given what could have happened yesterday, I am delighted that we are now free from this "vexatious" claim. The case against GKP did not appear to have any merit to me - I am no expert, so why would anyone put hard cash and reputations at stake to fund it in the first place? Possibly because of the enormous amount of oil, and the even greater ability to make a serious amount of cash by bringing this case in the first place. Anyway, I am still happy to be invested here, and I am also sure that we will be getting played like this when we hit £3, £4, £5 and beyond. Thats my take on it anyway. Good luck! ======== 'No one is a victim, everyone joins this game willingly and not knowing the players, the rules or the consequences is a choice not some grand scheme or great conspiracy.' ------- Not quite correct. Only since 2008 have people, and I mean your ordinary Joe Bloggs, come to some realisation of just how utterly corrupt our financial system had become. From high street banks to financial 'advisors' to hedge funds to merchant banks - from top to bottom the entire pyramid had become so infected with the disease of blind greed that reality - the world outside the bubble - had become an irritating irrelevance. Pauperisationpauperisation - the act of making someone poor impoverishment, pauperization Swine 1. Any of various omnivorous, even-toed ungulates of the family Suidae, including pigs, hogs, and boars, having a stout body with thick skin, a short neck, and a movable snout. 2. A person regarded as brutish or contemptible. SQUID=QUID (Economics, Accounting & Finance / Currencies) Brit slang a pound sterling for·lorn (fr-lôrn, fôr-) adj. 1. a. Appearing sad or lonely because deserted or abandoned. b. Forsaken or deprived: forlorn of all hope. 2. Wretched or pitiful in appearance or condition: forlorn roadside shacks. 3. Nearly hopeless; desperate. -------------------------------------------------------------------------------- The result was the collapse of traditional capitalism and the pauperisation of millions for the betterment of the few. Governments the world over used taxes, money we pay for the upkeep of services and education, to rescue overpaid, inept swine from the consequences of their own excesses. Nations have had to divert tens of billions from worthwhile services to save a financial system doomed to self-destruction as a result of incompetence, carelessness and ignorance. An integral part of this was what we call 'the markets', in reality a casino where mugs had their pockets picked by the House Bouncers and handed over to The Boss. The poster boy for the Kings of Greed were Goldman Sachs, an institution in New York that has caused more misery around the planet than all the burglars in the world combined. The legendary 'Vampire Squid' leaves a trail of toxic slime in its wake that is unmatched by any similar financial institution. It is, in every sense of the term, a monument to greed. It's into this rigged casino that so many hapless investors wander with their hard-earned money in the hope of bettering the future for their families and themselves. In most cases it's a forlorn hope since the result of their investment has largely already been pre-determined by the House. And the House never loses. What the Bible Says About Money (Shocking) Friday, 13 Sep 2013 12:09 PM Most people know Sean Hyman from his regular appearances on Fox Business, CNBC, and Bloomberg Television, but what they don’t know is that Sean is a former pastor, and that his secret to investing is woven within the Bible. Perhaps that can explain why, despite his uncanny ability to predict precise moves in the stock market, Sean is often laughed at for his unique stance on investing. For example . . . a few months ago Sean appeared on Bloomberg Television. At that time, Best Buy (BBY) was dropping to all-time lows of $16 a share. Sean predicted the stock could go down to $11 a share, and would then quickly rebound to $25 per share, and after that would rally to $40 per share over the next year. Another commentator on the show actually mocked Sean for his stance, saying “$40 on Best Buy? If that’s the case Apple (AAPL) is going to $1,500. That’s the most ridiculous thing I have ever heard!” (Editor’s Note: At the time, Apple was trading at $650 per share). Within a few weeks, Sean would receive the last laugh. Best Buy dropped down to $11.20 a share and has since rebounded to $30 a share, continuing its path to $40 . . . exactly as Sean predicted. (Ironically, Apple has dropped down to about $400 per share). During a recent private dinner with Sean, once he’d blessed the food, I wasted no time asking him what his secret is for investing so successfully. I expected Sean to say that it was his years of experience at Charles Schwab or perhaps one of the complicated algorithms he uses for timing the stock market. So when Sean responded that his secret to investing was the Bible, I was thoroughly shocked. Yes, I knew Sean was a Christian (anyone who spends more than 1 minute with him will pick that up!). However, people usually keep their faith separate from things like . . . investing. But not Sean. For Sean, the Bible is his FOUNDATION for investing. He explained to me how there is actually a “Biblical Money Code” woven into Scripture. Sean says it is this Biblical Money Code that took him from making a mere $15,000 a year to now giving away up to $50,000 a year. Sean also credits this code with helping him turn his father’s $40,000 retirement account into $396,000. Certain investment titans, Sean says, such as Warren Buffett and John Templeton, have already used this code to amass billions. What Sean had to say impressed me so much that I asked him to put a presentation together that reveals how anyone could use this “Biblical Money Code.” (Click here to watch it now) I’ve personally watched this presentation several times and it is already spreading virally. During the video, Sean uses the teachings of King Solomon, Jesus of Nazareth, and the Apostle Paul to show how anyone can get out of debt . . . make sound investments . . . and morally build substantial wealth. Sean even reveals a “debilitating ‘financial sin’ that blinds many . . . and could be costing you up to 41% of your life savings at this very moment.” What’s so deceiving about this sin is how innocent and safe it appears at first. And at the end, he finishes up with his “12-12-12 plan for investing.” This is a simple step-by-step plan to go from being a saver, to an investor, to a philanthropist. Click Here to Watch Sean’s Presentation, ‘The Biblical Money Code’ Read Latest Breaking News from Newsmax.com http://www.moneynews.com/MKTNewsIntl/Financial-bible-Hyman/2013/08/06/id/519032?promo_code=146F3-1&utm_source=taboola#ixzz2essHkAHX Urgent: Should Obamacare Be Repealed? Vote Here Now! ========== Wed, Sep 11 09:50 AM EDT image By Isabel Coles and Peg Mackey ARBIL, Iraq/LONDON (Reuters) - Sheltering in a bomb-proof safe room in a heavily-fortified office in Baghdad is the new reality for a senior Western oil executive who runs one of Iraq's oilfield mega-projects. Intensifying violence and car bombs have already forced him to restrict his movements and now, security experts say, he is under even closer watch from Shi'ite militias that may hit out at Western targets if Washington attacks neighboring Syria. "Every time there's a car bomb, we go into lock down mode," he said. The Shi'ite groups, closely linked to Iran, are also tracking his colleagues working 500 km away in the giant southern oilfields clustered near Basra - a Shi'ite-dominated city that Iraqi officials say is a no-go zone for Western oilmen. "The risk is of being in the wrong place at the wrong time," said a senior oil industry source. So far, turmoil in Iraq has not hit the operations of international oil companies, or deterred them from boosting output and turning Iraq into OPEC's second-biggest producer. But Baghdad's oil revival has stalled due to bottlenecks at ports, pipelines and the customs office. "Baghdad will make every effort to contain the fallout, but if we were to lose anyone, there would be huge pressure to withdraw - and we don't want to do that." An Iraqi Shi'ite militia group has threatened to attack U.S. interests in Iraq and the region if Washington strikes Syria, whose President Bashar al-Assad is backed by Tehran. Long accustomed to hostile environments, foreign executives from BP, ExxonMobil, Eni, Total and Royal Dutch Shell do not scare easily. But Iraqi security sources say Exxon, particularly at risk because as an American firm, is taking no chances, re-basing most of its workforce from the southern West Qurna-1 oilfield project to Dubai until tensions ease. "Exxon has zero-tolerance," said a source at a security company operating in Iraq. "Exxon has pulled out just about everyone." The company declined to comment. Despite the possibility of military action against Syria still alive, top executives visit Iraq. Paolo Scaroni, CEO of Italy's Eni, was in Baghdad at the start of the month - and senior management is staying put in the Iraqi capital. "The others are reviewing measures and emergency response plans, but there are no plans to evacuate," said a Western diplomat. ADDITIONAL PRECAUTIONS Foreign oil companies are likely to take their cue from diplomatic staff, say security experts. Several hundred Western oilmen are estimated to be rotating in and out of the country, with most at the southern oilfields and only a handful in Baghdad, say industry sources. While Washington is not actively removing people from its embassy, it is not allowing those away on annual leave to return. It has also issued staff with respirators and gas masks. "We've told our clients to take additional precautions: limit your activities, don't take people in and out of the country, keep them off the roads and do everything you can to limit your exposure," said the security company source. Since 2010, international oil companies have been tapping the southern oilfields, raising output by 600,000 barrels per day (bpd) to 3 million bpd. Infrastructure and logistical snags, rather than security issues, have frustrated their progress this year. U.S. oil firms have a fairly small footprint in southern Iraq compared with Chinese, Russian and British firms. Exxon is in charge at West Qurna-1, and Occidental has a small stake in the neighboring Zubair oilfield, run by ENI. Other mega-projects in the predominantly Shi'ite and relatively peaceful south are Iraq's biggest producer Rumaila - run by BP; Majnoon - led by Shell; Halfaya - operated by China National Petroleum Corp; and West Qurna-2, run by Russia's Lukoil. But the proximity of these fields to Iran make them vulnerable in the event of a retaliatory attack, security analysts say. Security experts do not expect militants to inflict any lasting damage on Iraq's oil infrastructure, which has helped generate nearly $60 billion this year. And the remote desert camps at the tightly-guarded oilfields offer expatriates a relatively high level of protection. Most of the bases have areas with hardened roofs to guard against missile attacks. Nonetheless, Western executives in the area have been warned by Iraq's South Oil Co (SOC), which oversees operations around Basra, to restrict their movements. "They'll throw rockets, they'll throw mortars - a few bombs," said the security source. "It's going to be more of a symbolic attack." (Editing by William Hardy) ============== Iraq signs deal with BP to revive northern Kirkuk oilfield Wed, Sep 11 07:37 AM EDT By Meeyoung Cho and Peg Mackey SEOUL/LONDON (Reuters) - Baghdad signed a deal in early September for BP (BP.L) to revive Iraq's northern Kirkuk oilfield, Oil Minister Abdul Kareem Luaibi said on Wednesday, confirming a plan that Kurdistan has already rejected as illegal. The agreement allows the British oil major - which already operates Iraq's biggest oilfield, Rumaila - to negotiate access to significant reserves in the north in return for helping Baghdad arrest a huge decline in output from Kirkuk. "We signed a letter of intent about 10 days ago," Luaibi told Reuters on the sidelines of an energy ministers' meeting in Korea. Reuters reported at the end of August that BP would work on the Baghdad-administered side of the border with Kurdistan, while the Iraqi Kurdish KAR group is developing a formation under the control of the Kurdistan Regional Government (KRG). "We are pleased with this agreement," a BP spokesman said. The deal faces opposition from the KRG, however, which rejected the planned pact as illegal when Baghdad revealed the preliminary arrangement with BP in January. "The KRG's position on this issue remains unchanged," a spokesman from the KRG's Ministry of Natural Resources said on Wednesday in response to the BP deal. "No company will be permitted to work in any part of the disputed territories including Kirkuk without formal approval and involvement of the KRG." Re-developing Kirkuk is part of a wider push by Baghdad to rescue Iraq's oil sector from decades of war and neglect. Oil provides the lion's share of Iraq's government revenues and foreign exchange earnings and the authorities have set a production target of 3.4 million barrels per day (bpd) for end-2013. The increasingly influential OPEC member is currently producing 3.25 million bpd, Luaibi told reporters ahead of an Asian oil ministers meeting in Seoul. Iraq hopes to add 175,000 bpd of capacity later this month with the start up of the Royal Dutch Shell-operated Majnoon field. Luaibi said Majnoon was expected to start a 10-day test production phase on September 20, after which the field was expected to ramp up towards full production. Work since 2010 at Iraq's southern oilfields by the likes of BP, Exxon Mobil (XOM.N) and Eni (ENI.MI) raised output by 600,000 bpd to 2.9 million bpd in 2012, turning Iraq into the world's fastest growing exporter. Iraq is currently exporting 2.5 million bpd, said Luaibi, compared to an average of 2.58 million bpd in August. Commenting on global oil prices, the Iraqi oil minister said about $100 per barrel was fair for consumers. Brent oil was at $111.62 at 1115 GMT. (Additional reporting by Amran Abocar; writing by Daniel Fineren; editing by James Jukwey) ====================