Monday, February 21, 2011

Iraq Reaches Post-2003 High In Oil Production And Exports

In January 2011 Iraq reached post-2003 highs in both oil production and exports. The Oil Ministry announced that the country’s output reached an average of 2.7 million barrels a day, while exports were at an average of 2.163 million. Previously, the highest production mark Iraq had achieved since the U.S. invasion was an average of 2.60 million barrels a day in May 2008, and 2.05 million barrels in exports in February 2010. Last month’s achievements were the result of foreign oil deals signed in 2009.

The Oil Ministry attributed January’s jump to the work of international firms. The Rumaila field, operated by British Petroleum and the Chinese National Petroleum Corporation (CNPC) increased production by 20% to 1.275 million barrels a day, Italy’s Eni boosted output at the Zubayr field 45% to 265,000 barrels, while Exxon Mobile raised West Qurna 1’s productivity to 11,000 barrels a day. One energy analyst argued that this was the easiest part of the work that the corporations would do in Iraq. They had to drill a few wells, fix existing ones, and repair old infrastructure. To raise production anymore, they have to invest billions into storage tanks, export terminals, major pipelines, water injection plants, import all of the equipment necessary for these projects, and overcome the shortages in skilled workers. These are the challenges that Iraq’s oil industry now faces if it wants to reach its lavish goal of 12 million barrels a day in capacity by 2017

Even then, the work that has already been done was enough for the country to return to around pre-war levels. Numbers for Iraq’s oil industry just before the fall of Saddam Hussein vary. Some place production between 2.5 million barrels a day and 2.8 million. That means at the beginning of 2011, Iraq finally either met or surpassed those marks. It took eight years, and several billion dollars in reconstruction funds to achieve that goal.

The foreign petroleum deals signed in 2009 are finally coming into affect, and resulted in January’s sharp increases. Iraq’s oil output is expected to continue to rise in the following months and years. The question now is how much, how fast, and at what cost.

Last 12-Months Oil Production-Exports (Average Million Barrels Per Day)
2010

Feb. 2.44 - 2.05
Mar. 2.25 - 1.84
Apr. 2.38 - 1.80
May 2.35 - 1.88
Jun. 2.41 - 1.86
Jul. 2.30 - 1.82
Aug. 2.32 - 1.82
Sep. 2.35 - 2.02
Oct. 2.35 - 1.91
Nov. 2.35 – 1.92
Dec. 2.41 – 1.95
2011
Jan. 2.70 – 2.16

SOURCES

Associated Press, “Iraq’s oil expansion plans face major challenges,” 1/13/11

Elliott, Michael, “So, What Went Wrong?” Time, 10/6/03

Kami, Aseel, “Iraq Jan oil exports highest since 2003-UPDATE 1,” Reuters, 2/2/11

Hafidh, Hassan, “Iraqi Oil Output Increases,” Wall Street Journal, 1/8/11

Rasheed, Ahmed, “ANALYSIS-Tougher times ahead for oil firms in Iraq,” Reuters, 1/24/11

Sanders, Edmund and Kraul, Chris, “Iraqi oil flow halted for a week by attack,” San Francisco Chronicle, 8/17/03

Today Magazine, “Oil potential is huge in Iraq: Analysts,” 1/29/11

No comments: