Monday, May 12, 2014

Increased Output From Southern Iraq Raises Oil Exports In April 2014


Iraq’s oil exports recovered in April 2014 despite its northern pipeline still being out of service. This was due to the country’s southern outlets increasing their output, thanks to increased capacity and a new central metering and manifold platform opening. The Basra pipeline will have to sustain this effort because it doesn’t seem like the Kirkuk line will be repaired any time soon due to the insurgency.

From March to April 2014 Iraq’s exports increased by over 110,000 barrels a day. Its flow to foreign markets went from 2.396 million barrels a day in March to 2.509 million in April. Almost all of this came from Iraq’s southern Basra pipeline. The northern Kirkuk line remains down since early last month when insurgents bombed it in Ninewa and then kept away repair crews. The flow through the south increased from 2.37 million to 2.509 million because of increased capacity at the two single point mooring facilities, along with a new central metering and manifold platform, which facilities exports through the two points. Each mooring has a capacity of 900,000 barrels a day but operates below that level due to a lack of pumping capacity, inadequate storage tanks, and other issues. A third mooring station is due to open in the middle of this year, and a fourth by the end of it. That will greatly enhance the country’s exports. Without that added capacity fields such as West Qurna 2 and Majnoon, which are just now ramping up, would have to cut their production since there is not enough storage space for much express petroleum that is not exported. The south already handles the vast majority of Iraq’s oil sales, and the country may become solely dependent upon it since the insurgency is increasing in the north making the Kirkuk line unreliable. Militants and oil smugglers attacked it almost once a week in 2013. Now it has been down for two months and there are no immediate plans to get it up and working again because it is too dangerous for work crews to go to the damaged section and repair it.


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
$7.47
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
$8
Jun.
2.40
$90.09
$6.453
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
$7.846
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.
2.32
$97.40
$6.799
Jul.
2.32
$101.00
$7.272
Aug.
2.57
$104.45
$8.356
Sep.
2.07
$104.87
$6.511
Oct.
2.25
$102.57
$7.160
Nov.
2.381
$102.57
$7.324
Dec.
2.341
$102.89
$7.470
2013 Avg.
2.386
$102.33
$7.435
Jan. 14
2.228
$102.37
$7.074
Feb
2.799
$102.05
$8.001
Mar
2.396
$101.03
$7.507
Apr
2.509
$100+
$7.577


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
December 2.081 mil/bar/day
2013 Avg. 2.16 mil/bar/day
January 2014 2.036 mil/bar/day
February 2.507 mil/bar/day
March 2.370 mil/bar/day
April 2.509 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
December 260,000 bar/day
2013 Avg. 264,200 bar/day
January 2014 192,000 bar/day
February 292,000 bar/day
March 25,806 bar/day
April 0 bar/day

The average price per barrel for Iraqi crude has not been released yet, but it remained above $100 in April. That meant the country was able to bring in $7.577 billion that month, roughly the same as March’s $7.507 billion. Prices have remained $100 or more since July, but they were heading downwards this year form $102.37 in January to $101.03 in March. The 2014 draft budget, which has not been passed yet due to political disputes relies upon oil for more than 90% of its funding. If the Oil Ministry is not able to keep up exports it will cause widespread financial problems. That puts added pressure for Baghdad to get the two new moorings up and running this year. The problem is that Iraq rarely finishes any major projects on time. The third mooring should still open this year, but the fourth may have to wait until 2015 if things don’t go right.

Iraq is increasing its petroleum production at a time when its export infrastructure is barely keeping pace. Anytime bad weather hits, maintenance is carried out, or a terrorist attack takes down one of the pipelines or shuts down a port, output at the fields has to be reduced, sometimes leading to re-injecting the oil back into them, which can damage the wells. The longer the fields are down the longer it takes to get output back up. Luckily the mooring stations in Basra are running at a higher rate so they can relieve some of this pressure. The same cannot be said for the north where major fields like Kirkuk are hampered by the line to Turkey being down. For the time being Iraq will have to solely rely upon its southern ports to handle all of its exports and earn most of its money since security is too bad in the center to get the Kirkuk line back up for now.

SOURCES

Lando, Ben, “Despite March exports drop, record output for new buoys,” Iraq Oil Report, 4/11/14

Lando, Ben, Al-Najaf, Kamaran, “Iraqi exports rebound despite loss of northern pipeline,” Iraq Oil Report, 5/4/14

Lawler, Alex, “Iraq’s southern oil exports on track for record in April,” Reuters, 4/23/14

Al-Najaf, Kamaran, Lando, Ben, “Iraq’s March oil exports fall by 400k bpd,” Iraq Oil Report, 4/25/14

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