Thursday, July 25, 2013

Iraq Sees Continued Problems With Its Oil Export Facilities In June 2013



Iraq’s oil exports and profits were down for the third straight month in June 2013. Bad weather led to a small drop in the south. More importantly, the northern pipeline to Turkey was down due to repairs for almost the entire month. That points to a larger problem that the country’s oil facilities have reached their limit as seen over the last 16 months, and there can be no more growth in exports until new infrastructure is added.

The petroleum industry faced several problems last month. Total exports dropped from 78.7 million barrels in April to 76.9 million in May to 69.8 million in June. That averaged out to 2.33 million barrels a day. That placed exports right back to where they were in December 2012 and January 2013 when they were at 2.34 million barrels and 2.35 million barrels respectively. The southern pipeline to Basra had a slight drop from 2.19 million barrels in May to 2.13 million in June. It is still averaging more this year, 2.169 million barrels a day, than last, 2.042 million barrels. The real problem was with the northern Kirkuk line to Turkey. For June it only averaged 193,300 barrels a day down from 283,800 barrels the previous month. That was the lowest amount in years. It exported a total of 5.8 million barrels in June when it was supposed to ship 9.6 million, and an average of 309,600 barrels. Bad weather and attacks upon the northern pipeline were the reasons given by the Oil Ministry for the lower than expected exports. Rough waters in Basra did temporarily halt docking in the ports there in early June. There were no reported bombings of the Kirkuk line however. Instead, it was down for almost the entire month because of leaks and maintenance work that continues into July. Overall, Iraq’s exports have been at a plateau for the last 16 months. They are almost the same this year, 2.45 million barrels per month as last, 2.41 million. Bad weather is seasonal. The problems with the northern line however point to a larger issue. The country’s export infrastructure has reached their limit, and there can be no further growth until new facilities are opened, and old ones rehabilitated. There are plans to add two more docking points in Basra, to build a connecting line from the northern fields to the southern ones, to expand the capacity of the Kirkuk line, to re-open a pipeline to Syria, and build a new one to Jordan. That’s an ambitious and aggressive strategy. Some of it, like the line to Syria will probably never materialize however, and due to Baghdad’s inefficient government, the rest may take far longer than planned to come to fruition. The Oil Ministry has recently revised down its export target to 9 million barrels a day by 2018. That’s probably unrealistic given the bureaucracy’s lack of capacity, which has made Iraq miss all of its previous goals. 

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
Apr.
2.62
$98.70
$7.764
May
2.48
$97.23
$7.477
Jun.
2.33
$97.41
$6.8
2013 Avg.
2.45
$101.61
$7.521

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
2012 Avg. 2.042 mil/bar/day
January 2013 2.093 mil/bar/day
February 2.196 mil/bar/day
March 2.1 mil/bar/day
April 2.31 mil/bar/day
May 2.19 mil/bar/day
June 2.13 mil/bar/day
2013 Avg. 2.169 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
2012 Avg. 373,300 bar/day
January 2013 264,500 bar/day
February 339,200 bar/day
March 316,100 bar/day
April 306,600 bar/day
May 283,800 bar/day
June 193,300 bar/day
2013 Avg. 283,900 bar/day

Prices for Iraqi crude have also fallen recently. A barrel of Iraqi petroleum sold for $97.41 in June, earing the country $6.8 billion down from $7.48 billion in May and $7.76 billion in April. This was the third month in a row that prices were below $100 per barrel after being there 23 months out of 30 since the start of 2011. That has brought down the average price from $106.20 per barrel in 2012 to $101.61 this year. Average monthly earnings have gone down as well from $7.835 billion last year to $7.521 billion this year. The 2013 budget is based upon 2.9 million barrels a day in exports at $90 per barrel. The former is improbable, but the latter is still a reality. Iraq relies upon oil for 90% of its revenue. Fortunately for it, the government has never been able to spend all of its budget, especially as it has grown in size the last few years, so not reaching the export mark is not so important as keeping up prices.

Iraq was hoping for large growth this year in its oil industry, but that has not materialized. There was a large spurt in exports towards the beginning of 2012 when two new mooring points were opened in Basra. Exports continued to climb throughout 2012 as the Kurdistan Regional Government (KRG) and Baghdad reached a new oil deal. That fell apart, bad weather has hit, and the northern pipeline has been plagued by problems all contributing to the current stagnation. It doesn’t matter whether production goes up if it can’t be pumped out to foreign markets. This is the dilemma facing Iraq right now. Until new facilities are opened exports will remain at the current plateau.

SOURCES

Al-Ansary, Khalid, Ajrash, Kadhim & Razzouk, Nayla, “Iraq Crude Exports Fall for Second Month on Attacks, Bad Weather,” Bloomberg, 7/22/13

Aswat al-Iraq, “Iraqi oil re-pumped to Turkish terminal,” 6/6/13
- “Kirkuk oil exports to Turkey resumed,” 6/21/13
- “Stoppage in Iraqi oil exports to Turkey,” 6/19/13

Chazan, Guy, “Storm clouds threaten Iraq’s striking oil revival,” Financial Times, 7/8/13

Hafidh, Hassan, “Iraq northern oil exports on hold for 7th day – shipping agent,” Dow Jones, 6/27/13

Middle East Economic Survey, “Document – Iraq’s Integrated National Energy Strategy,” 6/17/13

Platts, “Iraq’s Kirkuk crude shut again following second failed restart,” 7/12/13

Reuters, “Crude oil flows through Iraq-Turkey pipeline down,” 7/22/13
- “Iraq’s oil exports fall 200,000 bpd so far in June,” 6/21/13
- “Rough weather halts Iraq Basra oil exports – shipper,” 6/10/13

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