Thursday, May 1, 2014

Insurgent Attacks And Clearing Southern Waterway Lead To Drop In Iraq’s Oil Exports

 
After reaching a new post-2003 high in February, Iraq’s oil exports took a drop in March 2014. This is nothing new as Iraq’s petroleum industry often goes through ups and downs because of attacks, bad weather, maintenance work, and other issues. March was a perfect example as insurgents blew up the northern Kirkuk pipeline, and then stayed in the area to prevent crews from repairing it. In the south, the waterway around al-Basra Oil Terminal was temporarily down to remove old wrecks. Together those accounted for March’s decline.

Iraq’s exports saw a 400,000 barrel a day decline from February to March. In February Iraq reached a new high at 2.799 million barrels a day. That was the most for several decades, and highlighted Iraq’s potential. Then in March they went down to 2.396 million barrels a day. The southern pipeline to Basra, which carries the vast majority of the country’s oil flow went from 2.507 million barrels a day in exports to 2.370 million. That was due to removing shipwrecks from the area around al Basra Oil Terminal. Much more important the northern Kirkuk line to Turkey went from an average of 292,000 barrels a day in February to just 25,806 in March. The cause was militants blowing up the line several times in early March, and then attacking repair crews that went to the damaged area. With the Iraqi Security Forces’ commitments in other parts of the country it was not able to provide security for the oil workers or the pipeline, causing the North Oil Company (NOC) to give up its effort to fix the line for now. That is forcing the NOC to cut back production on the northern fields it operates such as Kirkuk, and re-inject some of the oil back into the wells because there is a lack of storage facilities. That can damage the fields, and the longer output is down the longer it can take to ramp them back up. Even when the Kirkuk line returns to operation it will be attacked again as it was blown up nearly once a week in 2013. Finally, this might kill the Oil Ministry’s plans to build a new parallel line to the Kirkuk one, because the area is simply too insecure.


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


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

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

On the positive side March saw hefty profits. Iraq earned $7.507 billion last month, which was down from February’s $8.001 billion, but above January’s $7.074. That was despite a decline in the price of Iraqi crude from $102.37 per barrel in January to $102.05 in February, and $101.03 in March. So far Iraq is averaging $7.527 billion a month, which is above 2013’s $7.435 billion. The nation needs to bring in as much as it can because its budget is exploding, and is not always well planned threatening the country with deficits. Sometimes it appears that the politicians are drawing the budget based upon Iraq’s potential rather than the realities of its oil industry, which provides over 90% of the government’s funding.

Ebbs and flows are a constant with Iraq’ exports. In October 2012 it achieved 2.62 million barrels a day in exports, which was then the highest post-03 mark achieved. It was able to sustain that rate for only one month before the amounts dropped. It wasn’t able to achieve that mark again until April 2013 before dipping again. That’s the reason why the headlines about February 2014’s new high had to be taken with a grain of salt. Iraq Oil Report has pointed out that the southern single point moorings are increasing their capacity, which should mean more exports from the south in the near future. However the Kirkuk line could be down for weeks more, and there’s no telling how long it will stay on line before it is blown up again by insurgents who could repeat their tactic again and keep repairs from being done. That puts Iraq in a precarious situation as petroleum production is largely regulated by how much the country can export. Without a steady stream to foreign markets output has to be curtailed setting back the Oil Ministry’s grand plans for the future. The Ministry is working on trying to solve these bottlenecks, but the nature of the country is that everything always takes far longer than is planned. That’s the major reason why exports have been at a plateau for the last two years.

SOURCES

Kent, Sarah, and Scheck, Justin, and Bradley, Matt, “Iraq Oil Output Exceeds Hussein Era,” Wall Street Journal, 4/21/14

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

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

Republic Of Iraq Ministry of Oil, “Iraqi Crude Oil Exports – March 2014,” 3/25/14

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