Monday, February 25, 2013

Have Iraq’s Oil Exports Hit a Plateau?


In January 2013, Iraq’s oil exports went up a fraction from the previous month. The price for a barrel of Iraqi crude did increase by over a dollar however. Still, with disputes between Baghdad and the Kurdistan Regional Government (KRG) over oil contracts, infrastructure bottlenecks, and other issues, it appears as if Iraq’s ability to deliver more petroleum for foreign sales has hit a plateau until some of these problems are resolved.

Oil exports barley changed from January 2013 to December 2012, and was far lower than the amounts seen last year. In January, the Iraqi Oil Ministry reported an average of 2.35 million barrels a day in exports. That was only a small increase from December’s 2.34 million barrels. Both figures were below the 30-year highs seen in 2012. In October and November for example, Iraq hit 2.62 million barrels a day, the highest amount since the 1980s. The south remained the workhorse of the country’s industry, exporting an average of 2.093 million barrels a day last month, up from 2.022 million in December. The flow through the southern pipeline went up despite the Rumaila oil field shutting down for a short period for maintenance work, and bad weather preventing tankers from docking in Basra’s ports. Both of these are routine events, which have a negative affect upon exports. The northern pipeline on the other hand, has seen a three-month decline. In January, 264,500 barrels a day went through the line, down from 325,800 in December. This was due to the Kurds ending exports in the middle of December over disputes with the central government over paying oil companies operating in the north, and more importantly, who has the right to sign oil contracts and sell petroleum. The central and regional governments have signed a series of short-term deals that inevitably break down, which means a steady flow of Kurdish oil through the northern pipeline cannot be counted on until the larger arguments are resolved. The northern line was also blown up in January in Turkey. The Iraqi government blamed the Kurdistan Workers’ Party (PKK), which is carrying out a campaign against Turkey’s energy field. Finally, 11,000 barrels a day were trucked to Jordan in January. Iraq has seen steady progress in oil production in the last several years. What the country lacks is adequate infrastructure and political agreements to fully exploit that potential. Iraq has plans to address the former, but they are coming along slowly. The differences between Kurdistan and Prime Minister Nouri al-Maliki are more enduring, and are unlikely to be solved any time soon. All together that accounts for why exports have plateaued after witnessing record highs last year.


Iraq Oil Exports And Profits 2011-2013
Month
Avg.
Exports
(Mil/
Bar/
Day)
Avg. Price Per Barrel
Revenue (Bill)
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
$8.445
Sep.
2.59
$107.59
$8.371
Oct.
2.62
$105.51
$8.578
Nov.
2.62
$104.32
$8.200
Dec.
2.34
$103.72
$7.551
2012
Avg.
2.41
$106.20
$7.835
Jan. 13
2.35
$104.92
$7.672


Oil Exports Through Basra 2012-2013
January 2012 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 2.178 mil/bar/day
October 2.172 mil/bar/day
November 2.122 mil/bar/day
December 2.022 mil/bar/day
January 2013 2.093 mil/bar/day

Oil Exports Through Kirkuk 2012-2013
January 2012 393,500 bar/day
February 375,800 bar/day
March 400,000 bar/day
April 393,300 bar/day
May 364,500 bar/day
June 316,600 bar/day
July 300,000 bar/day
August 312,900 bar/day
September 420,000 bar/day
October 451,600 bar/day
November 426,600 bar/day
December 325,800 bar/day
January 2013 264,500 bar/day

Despite exports hardly changing, the price of oil did go up for Iraq. In January a barrel of Iraqi crude went for $104.92. In December it sold for $103.72 per barrel. That dollar plus increase allowed Iraq’s revenue to go from $7.551 billion in December to $7.672 billion in January. The value of oil has been above $100 a barrel for twenty-one of the last twenty-four months for Iraq. This is a prime time for the country to pump and sell as much petroleum as possible in case prices take a dip. That is actually Iraq’s current strategy. Unfortunately, that has not been possible, because of the problems stated above.

Iraq’s oil industry has hit several plateaus in recent years. It now appears that the country is facing another. Exports peaked in late-2012, but have since gone back down to what they were at the beginning of last year. With new infrastructure only slowly coming on line, and more importantly, the continued bickering between Kurdistan and Baghdad over the future of the energy industry there appears little chance for change in the short-term. Iraq will still be able to reap a huge amount of money, but it could be earning a lot more if it was able to solve these outstanding issues.

SOURCES

Ajrash, Kadhim and Razzouk, Nayla, “Iraq Kurds Halt Crude Exports, Central Government Official Says,” Bloomberg, 12/24/12

Business News Europe, “Iraqi oil link to Turkey hit by explosion,” 1/21/13

Ministry of Oil, “Iraq Crude Oil Exports – January 2013,” 2/21/13

Reuters, “UPDATE 1-Iraq Basra oil exports restored after bad weather –shipper,” 1/12/13

Siddiqui, Shoaib-ur-Rehman, “Iraq oil exports rise to 2.359mn bpd in January,” Reuters, 2/3/13

Wicken, Stephen and Sullivan, Marisa, “2013 Iraq Update #7: De-Baathification Body Ousts Iraq’s Chief Justice as Protests Continue,” Institute for the Study of War, 2/15/13

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