Thursday, December 5, 2013

Iraq’s Oil Exports Up In November 2013 But Still At Plateau That Might Continue For Near Future

 
November saw Iraq’s oil exports recover after two months of work to facilities in Basra. Both the southern and Kirkuk pipelines witnessed nice increases. Despite that the country’s exports are at a 21-month plateau overall, which many analysts and industry sources believe will continue into 2014.

Last month saw a return for Iraq’s two export pipelines. November’s average was 2.381 million barrels a day. That was up from 2.253 million in October. At $102.57 per barrel that rate brought in $7.3 billion for the month. The backbone of the industry Basra saw an average of 2.281 million barrels last month. In October it only had an output of 2.06 million barrels due to maintenance work. Now the line is back on track to where it was going before that when it went from 2.13 million in June to 2.32 million in July. The Kirkuk pipeline saw 309,000 barrels a day in November, which was the highest since March when it pumped 316,100. This occurred despite the line being bombed on November 2 in Ninewa, which shut it down for a day. For much of the second half of the year the northern pipeline has been plagued by massive leaks and related repair work that dramatically cut its output. For 2013 it has been averaging 264,200 barrels a day, down from 373,300 barrels when Kurdistan was contributing to the Oil Ministry’s exports. The Basra line on the other hand has gone from 2.042 million in 2012 to 2.17 million in 2013. Still, Iraq’s overall output has declined from 2.41 million in 2012 to 2.39 million this year. Overall, the industry has been at a 21-month plateau since new export facilities were opened up at the beginning of 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
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
Oct.
2.25
$102.60
$7.17
Nov.
2.38
$102.57
$7.324
2013 Avg.
2.39
$102.28
$7.432


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
October 2.06 mil/bar/day
November 2.281 mil/bar/day
2013 Avg. 2.17 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
October 193,000 bar/day
November 309,00 bar/day
2013 Avg. 264,200 bar/day

The major issue now is whether Iraq can overcome this predicament and achieve its ambitious goals. The Oil Ministry wants to reach 3.5 million barrels a day in production and 2.9 million in exports in 2014. It’s talking about new output from Majnoon, West Qurna 2, Gharraf, Halfaya and Badra next year. Majnoon just came on line, and West Qurna 2 is supposed to start in March or April 2014. Iraq has growing demand for its oil in Asia as well from China, India, Japan, and South Korea. The problem is that Baghdad has never been able to meet its marks. The Oil Ministry originally wanted to hit 3.5 million at the end of this year. That was actually down from their previous estimate of 3.7 million for 2013, which was dropped after the Kurds halted their exports. The causes are many. For one there is a lack of storage capacity in the south. That means whenever exports go down production has to be cut as well. That’s likely going to happen in the first quarter of 2014 as bad weather usually hits Basra in the winter limiting docking there. Second, the Kirkuk line is in bad shape due to age, and needs to be repaired and renovated to reach even its current capacity. Third, many analysts don’t think there will be any major infrastructure additions at the beginning of next year. to alleviate these bottlenecks. Fourth, output may not ramp up as quickly as expected. Developing the Badra field for example is behind schedule due to delays at customs, lack of completing work and getting tenders approved, along with security concerns. That has led some analysts to believe there will only be modest growth next year. Finally, even if Iraq were to achieve its lofty aims it might harm oil prices as other countries are ramping up production too. There is already talk amongst some OPEC members to cut output in 2014 to maintain profits. Overall, it seems like exports might go up somewhat next year, but not to the levels Baghdad would like to see.

SOURCES

Agence France Presse, “Iraq oil pipeline bombed, pumping shut down,” 11/2/13

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

Faucon, Benoit, Said, Summer and Kent, Sarah, “OPEC Rift Emerging Over Iraq Output, Possible Return of Iran,” Wall Street Journal, 11/29/13

Mackey, Peg, “Iraq sees hefty return to oil growth in 2014,” Reuters, 10/23/13

Mackey, Peg and Lawler, Alex, “Iraq strives to return to big oil output growth,” Reuters, 11/19/13

Reuters, “UPDATE 1-Iraq’s November oil exports rise to 2.381 mln bpd,” 12/1/13

Soldatkin, Vladimir and Golubkova, Katya, “UPDATE 2-Lukoil to launch Iraqi field by April, double foreign oil output,” Reuters, 11/27/13

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