Iraq’s Oil Industry Hits A Plateau

Iraq’s oil exports and earnings hit a plateau in mid-2009 at roughly 1.9 million barrels a day, and approximately $4 billion in profits per month. Before that, Iraq was experiencing a steady increase in revenue, which doubled from the beginning of 2009 to the end. In January 2009 a barrel of Iraqi crude sold for $36. By October 2009 it passed the $70 mark. Since the beginning of 2010 however, prices have begun to fluctuate, while exports have gone up slightly. In January 2010 Iraqi oil sold at $73.97 a barrel, compared to $73.40 in February. That meant despite the fact that exports went up from 1.92 million barrels a day in the first month of the new year to 1.99 million barrels the next, Iraq’s earnings dropped from $4.44 billion in January to $4.229 billion in February.

The country’s petroleum infrastructure is handling as much capacity as it can hold, and needs massive investment just to maintain its current levels. The Oil Ministry is hoping that the new contracts it signed with foreign companies in 2009 will provide this money and know how, but it doesn’t look like that will begin until the end of the year. For instance, a consortium made up of Russia’s Lukoil, Norway’s Statoil Hydro, and one of Iraq’s state-owned oil companies don’t have plans to start work on the West Qurna 2 field in Basra that was auctioned off in December 2009 until late this year. That will mean that Iraq will maintain its current production and export levels as well as profits for the majority of 2010 when it needs to earn more to meet its budget obligations, and pay for much needed development of its economy and services.

Iraq Avg. Oil Production/Exports Per Day/Earnings
2009
May 2.41 mil/bar/1.90 mil/bar/$3.4 bil
June 2.43 mil/bar/1.94 mil/bar/$3.7 bil
July 2.49 mil/bar/2.04 mil/bar/$4.0 bil
Aug. 2.49 mil/bar/1.98 mil/bar/?
Sep. 2.50 mil/bar/1.95 mil/bar/$3.8 bil
Oct. 2.50 mil/bar/1.89 mil/bar/$4.1 bil
Nov. 2.37 mil/bar/1.92 mil/bar/$4.2 bil
Dec. 2.40 mil/bar/1.91 mil/bar/$4.4 bil
2010
Jan. 2.46 mil/bar/1.92 mil/bar/$4.4 bil
Feb. 2.45 mil/bar/1.99 mil/bar/$4.2 bil

SOURCES

Agence France Presse, “Iraq oil revenue dip despite record exports,” 3/23/10

Iraq-Business News, “Russian Lukoil to start drilling Iraqi oil fields before the end of this year,” 3/22/10