Iraq Oil Exports See Slight Increase In September 2012, While Profits Stay The Same

Iraq’s oil industry continues to see incremental, yet sometimes inconsistent growth. September saw a small increase in exports, which still marked the highest level since 2003. That was in part due to Kurdistan re-starting its foreign sales. At the same time, revenues for last month were nearly the same as August. The problem as ever is the lack of adequate infrastructure. That remains the largest impediment to Iraq achieving its energy goals.

September 2012 saw another post-invasion high in Iraq’s oil business. For the month, the country exported an average of 2.600 million barrels a day. That was slightly up from the 2.564 million barrels seen in August. Exports have been going up for the last three months starting in July. Before that they were heading up and down. Still, September’s mark was the largest amount of petroleum sent abroad since the 2003 invasion. Iraq is now the second largest exporter amongst OPEC countries as a result, having surpassed Iran. The Oil Ministry stated that it hopes to reach 2.9 million barrels a day in exports by 2013. That seems a reasonable goal. The issue is how much the nation’s pipelines and port can handle.

Iraq Oil Exports And Profits 2011-2012

Month	Avg. Exports (Mil/ Bar/ Day)	Avg. Price Per Barrel	Revenue (Bil)
Jan. 11	2.16	$90.78	$6.082
Feb.	2.20	$98.44	$6.064
Mar.	2.15	$107.13	$7.167
Apr.	2.14	$114.26	$7.342
May	2.22	$108	$7.45
Jun.	2.27	$105.17	$7.173
Jul.	2.16	$108.79	$7.311
Aug.	2.18	$104.91	$7.124
Sep.	2.10	$104.89	$6.619
Oct.	2.08	$104.04	$6.742
Nov.	2.13	$106.59	$6.833
Dec.	2.14	$106.18	$7.061
2011 Avg.	2.16	$105.00	$6.913
Jan. 12	2.10	$109.08	$7.123
Feb.	2.01	$112.92	$6.595
Mar.	2.31	$117.99	$8.472
Apr.	2.50	$116.79	$8.795
May	2.45	$103.03	$7.831
Jun.	2.40	$90.09	$6.487
Jul.	2.51	$97.14	$7.577
Aug.	2.56	$106.22	$8.442
Sep.	2.60	$107	$8.4

Oil Exports Through Basra 2012
January 1.711 mil/bar/day

February 1.639 mil/bar/day

March 1.917 mil/bar/day

April 2.115 mil/bar/day

May 2.086 mil/bar/day

June 2.085 mil/bar/day

July 2.216 mil/bar/day

August 2.252 mil/bar/day

September 2.180 mil/bar/day

Oil Exports Through Kirkuk 2012

January 395,000 bar/day

February 375,000 bar/day

March 400,000 bar/day

April 393,000 bar/day

May 366,000 bar/day

June 318,000 bar/day

July 294,000 bar/day

August 313,000 bar/day

September 410,00 bar/day

Iraq’s two major pipelines saw opposing trends last month. Basra, the mainstay of the industry, exported an average of 2.180 million barrels a day in September. That was down from August’s 2.252 million barrels, and July’s 2.216 million. The northern line from Kirkuk to Turkey on the other hand saw 410,000 barrels a day of exports in September. That was the highest amount since March when it handled 400,000 barrels a day. The increase was due to Kurdistan restarting its oil exports in August. It pumped around 120,000-140,000 barrels a day last month. The reason for the decline in southern output was not detailed. It could be due to any number of issues from technical problems to bad weather, which usually beset Basra.

Despite the slight increase in exports from the south, the oil fields there have been showing steady expansion. By the middle of September, they were producing around 2.5 million barrels. The only setback has been the Majnoon field, which shut down in June for maintenance, and won’t restart until the beginning of next year. Iraq could be exporting even more if not for the lack of infrastructure. The southern fields are actually producing far more than the country can handle presently. The government is slowly dealing with this problem. Last month for instance, the Oil Ministry and Italy’s Eni signed a $358.8 million deal with SICIM to install new pipelines at the Zubayr field. After years of war and sanctions, Iraq needs everything for its oil industry to see further progress from new lines, to pumping stations, to storage facilities, to refineries. Unfortunately, planning is sometimes based upon short-term goals, and there is always the red tape and bureaucracy, which slows everything down.

On the other hand, Iraq is still benefiting from high petroleum prices due to instability in the world market. In September, the average price of Iraqi crude sold for $107 a barrel. That was up from $106.22 seen in August. For two months this year, prices dipped below $100 for the first time since February 2011, but now they have gone back up, because of the fighting in Syria, and sanctions on Iran. As a result, Iraq earned $8.4 billion in September, which was basically the same as August. As long as there is conflict going on in the Middle East, and so far there has not been a shortage of that, Iraq will be reaping the profits. This is important for the country as a whole, as oil provides over 90% of the government’s revenues, and fuels the budget and gross domestic product.

Iraq’s oil output is always a little unpredictable. There can be months of growth, only to see a decline. For three months now exports, prices, and profits have been going up. Before that, there was a two-month decline. That’s simply the nature of Iraq’s petroleum business. Until it builds all of the infrastructure that it needs there will always be these ups and downs as one little setback can affect the entire network, and cause a drop. Still, the long-term looks bright. It’s just a matter of how long will it take to put together all of the necessary parts for Iraq to reach its full potential.

SOURCES

Agence France Presse, “Iraq September oil exports slightly higher,” 10/1/12

Ajrash, Kadhim, “Iraq Crude Output Rises to Highest Since 1979, Oil Ministry Says,” Bloomberg, 9/25/12

Hafidh, Hassan, “Italy’s SICIM Secures $358.8 Million Iraq Zubair Oil Field Deal – Spokesman,” Dow Jones, 9/18/12

Mohammed, Aref, “UPDATE 1-Iraq’s southern oil output at 2.5 mln bpd – SOC oil chief,” Reuters, 9/11/12

Rasheed, Ahmed, “UPDATE 2-Kurdistan warns Baghdad it will halt oil exports again,” Reuters, 8/28/12

Razzouk, Nayla, “Iraq’s Kurds Say Crude Exports Rise to 140,000 Barrels a Day,” Bloomberg, 9/20/12

Republic Of Iraq Ministry of Oil, “Crude Oil Exports”

Sabri, Abdullah, “Kurdistan may increase its oil exports to more than 250,000 bpd,” AK News, 9/19/12

Shafaq News, “Oil Ministry: rate of exports for September rose,” 10/2/12

Yackley, Ayla Jean, “Shell sees Majnoon resuming oil output in Q1,” Reuters, 9/18/12