Wednesday, May 1, 2013

Iraq’s Oil Industry Still At A Plateau


After hitting a 30-year high in oil exports at the end of 2012, Iraq’s oil output has since faltered. March 2013 was no different as the amount of petroleum shipped out fell from February, and matched the average for last year. The Oil Ministry tried to cover that up by claiming that the aggregate numbers and revenue were up for the month, but that’s because March has 31 days compared to February’s 28. Overall, the country’s leading industry has hit a plateau for at least the short-term.
Tanker docked at one of Iraq's new mooring points in Basra (Reuters)

March witnessed a drop in both exports and the price for Iraqi oil. The Oil Ministry announced that it exported a total of 74.9 million barrels for the month, which was up 3.9 million barrels from February’s 71.0 million. (1) Of course, that missed the fact that March has three more days than the previous one. When averaged out that meant that exports actually fell from 2.53 million barrels a day in February to 2.41 million in March. Both were below the government’s target of 3million barrels per day for the year. March’s decline was due to a fall in shipments from both the south and north. An average of 2.1 million barrels a day flowed through the southern pipeline to Basra, down from 2.196 million in February. That was because the government only contracted for 35 cargos through Basra for March, six fewer than the previous month. The northern Kirkuk line went from 339,200 barrels in February to 316,100 in March. Output headed towards Turkey has gone up and down since the Kurds officially suspended their exports at the end of 2012. This is the ebb and flow that has characterized Iraq’s oil industry for the last several years. Exports go up and down for any number of reasons from bad weather that shuts down the ports in Basra to attacks upon the northern pipeline to bottlenecks holding up the flow of oil. Overall, for the last twelve months the country has been at a plateau in its foreign sales. There was a dramatic increase in exports at the end of 2012 when Iraq hit its highest levels in 30 years. Since then they have gone back down to where they were in the spring of 2012. From March to May 2012 for example, Iraq exported 2.31 million, 2.50 million, and 2.45 million respectively. From January to March 2013 it shipped 2.35 million, 2.53 million, and 2.41 million. That’s not to say that exports can’t go back up, but the Oil Ministry has not proven that it can sustain them for any time yet.
 

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
Feb.
2.53
$107.66
$7.644
Mar.
2.41
$103.76
$7.772



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
February 2.196 mil/bar/day
March 2.1 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
February 339,200 bar/day
March 316,100 bar/day

March also witnessed a drop in prices for its crude. One barrel of Iraqi oil went from $107.66 in February to $103.76 the next month. Profits were still up to $7.772 billion, the highest amount since November’s $8.2 billion. Since 2011, Iraqi prices have stayed above $100 per barrel for 23 out of 27 months. This is due to continued tensions in the region such as the fighting in Syria, and Iran’s nuclear program. Iraq has been the beneficiary of this unrest, and has reaped the rewards through high oil revenues, which funds most of the government and economy.

Iraq’s petroleum industry remains prosperous, but not as much as Baghdad had planned. Exports have fluctuated up and down after hitting a 30-year high at the end of last year. Overall, production and exports have gone up each year, just not at the rates the Oil Ministry predicted. The infrastructure is simply not there yet to sustain those high numbers. This will be the pattern for the immediate future until new pipelines, mooring points, storage facilities, etc. are built and come on line.

FOOTNOTES

1. Republic of Iraq Ministry of Oil, “The Iraqi Ministry of Oil Declares its Export for February 2013,” 3/24/13

SOURCES

Aswat al-Iraq, “March oil exports increased, ministry of oil,” 4/24/13

Lee, John, “Iraq to cut Basra Crude Exports,” Iraq Business News, 3/5/13

Platts, “Iraq’s February oil output rises marginally to 2.963 million b/d,” 3/27/13

Republic of Iraq Ministry of Oil, “The Iraqi Ministry of Oil Declares its Export for February 2013,” 3/24/13

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