Wednesday, October 30, 2013

Maintenance Work In Southern Iraq Causes Planned Disruption In Oil Exports For Sep 2013

 
September and October 2013 saw major maintenance work on Iraq’s ports in Basra which account for the vast majority of the country’s oil exports. That caused a decline in sales for September, but prices remained high, and the flow through the southern pipeline was actually higher than scheduled. At the same time two oil fields came on line, and there are continued plans for a large expansion in production and exports by the end of the year into 2014. Iraq’s petroleum industry is steadily moving forward, but not at the tremendous rates originally predicted.

Repairs to Iraq’s two southern ports caused a large decline in exports for September 2013. For that month the country exported an average of 2.07 million barrels a day. That was down from 2.58 million barrels in August, and the lowest amount since October 2011 when Iraq exported 2.08 million barrels. The maintenance work shut down two of Iraq’s four mooring points in Basra, and extended into mid-October. The construction was supposed to increase capacity in the south. There was also a leak in the pipeline system at the Rumaila oil field. All together that led the Basra pipeline to only export 1.90 million barrels in September, down from 2.30 million in August. That was the lowest amount since February 2012’s 1.639 million barrels, but was higher than the Oil Ministry scheduled for the month, which was 1.8 million. For the year, the south has exported an average of 2.171 million barrels. For the north, the Kirkuk line exported an average of 250,000 barrels a day in September, a decline from August’s 270,900, but still better than June and July when the pipeline was beset by leaks and repair work that kept exports below 200,000 for each month. In 2013 the Kirkuk line has exported an average of 267,200 barrels. The Oil Ministry said it expected higher exports in October to make up for the drop in September. So far 2013’s exports have not grown from last year and stand at an average of 2.41 million barrels for the last 21 months.

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
$6.799
Jul.
2.32
$101.00
$7.272
Aug.
2.58
$104.45
$8.356
Sep.
2.07
$104.84
$6.511
2013 Avg.
2.41
$102.21
$7.474

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
July 2.32 mil/bar/day
August 2.30 mil/bar/day
September 1.90 mil/bar/day
2013 Avg. 2.171 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
July 180,600 bar/day
August 270,900 bar/day
September 250,000 bar/day
2013 Avg. 267,200 bar/day

Iraq’s revenues went down in September as well, although prices remained high. For the month the nation earned $6.511 billion, which was the lowest since June 2012 when it brought in $6.487. On the other hand, the country continued to benefit from continued tensions in the Middle East. That raised prices for Iraqi crude from $104.45 in August to $104.84 in September. It seems like the value for Iraqi oil will remain high for at least the short term, so profits will stay up despite September’s dip. For the year Iraq has been averaging $7.474 billion a month, and sold its oil for $102.21 per barrel despite three months when it fell below $100.

Iraq’s production has continued to go up. In September Shell restarted pumping at the Majnoon field in Basra. It had been closed for several months due to maintenance work. The company wants it to reach 175,000 barrels a day by October. Malaysia’s Petronas also started producing at Gharraf in Dhi Qar province at 35,000 barrels a day. Oil Minister Abdul Karim Luaibi told the press that the goal is to reach 3.5 million barrels a day in output and 2.9 million in exports by the end of December. Asian countries such as China and India will be driving demand for that increase into 2014. The problem is overcoming the bottlenecks, maintenance work, and bad weather that constantly plagues the petroleum industry. Several undersea pipelines in Basra are corroding, which means they can’t operate at capacity. There has been delays in building new storage tanks in Basra. There’s limited pumping capacity at some fields. The Basra ports are often hit by bad weather that limits the ability of ships to dock. The Oil Ministry needs to invest in a water injection system to extract oil from the southern fields. The Kirkuk line is in even worse shape, as it is old and corroding, plus it is often attacked by insurgents. On September 17 and September 27 (1) the pipeline was bombed in Ninewa. The Oil Ministry wants to address all of these issues, but the work takes time. That’s the reason why exports have flat-lined since March 2012 when two new mooring points were opened in Basra. Expansion will probably continue to see slow progress despite Baghdad’s plans.

The maintenance on the Basra facilities caused a predicted dip in exports and profits for the month of September. October is supposed to see rates return to their previous levels. The oil industry is still at a 19-month plateau however. Much more work is needed to see another jump in exports as happened at the beginning of 2012. That’s going to happen when the new mooring points open in 2014. If history is anything exports will then level off until the next major piece of infrastructure is installed. The business is seeing steady growth, it’s just not at the pace predicted.

FOOTNOTES

1. Alsumaria, “The bombing of carrier oil pipeline to Ceyhan Nineveh and found the bodies of implementing,” 9/27/13

SOURCES

Alsumaria, “The bombing of carrier oil pipeline to Ceyhan Nineveh and found the bodies of implementing,” 9/27/13

Al-Ansary, Khalid & Ajrash, Kadhim, “Iraq to Boost Oil Output This Year as Asian Demand Strengthens,” Bloomberg, 10/23/13

Berdikeeva, Saltanat, “Roadblocks on Iraq’s Leap of Faith to Oil Success,” European Energy Review, 10/8/13

Buratha News, “Stop Iraqi oil exports to Turkey after the bombing of the carrier tube south of Mosul,” 9/17/13

Lee, John, “Basra Export Terminal Fully Reopened,” Iraq Business News, 10/15/13
- “Oil Output Rises as Leaks Fixed,” Iraq Business News, 9/23/13

Republic of Iraq Ministry of Oil, “Crude Oil Exports,” 10/25/13

Reuters, “Iraq crude exports drop in September,” 10/4/13
- “Iraq southern oil exports drop in Sept,” 10/1/13
- “Iraq’s southern oil exports slow in September,” 9/14/13
- “Iraq’s southern oil output remains cut by leak,” 9/17/13
- “Shell Restarts Iraq’s Majnoon Oilfield, Petronas Has Minor Share,” 9/21/13

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