Monday, February 16, 2015

Iraq Oil Exports Dip In January Bad Sign For 2015 Budget


Iraq remains one of the most oil dependent countries in the world. Its 2015 budget, which was just ratified by the country’s president relies upon petroleum for 85% of its revenue. Unfortunately, neither the export mark set in that document or the price for Iraqi crude are likely to be met meaning that the government will be facing an even larger deficit than it expects and a greater financial crisis.

January 2015 saw a drop in exports by Iraq. The country average 2.35 million barrels a day, down from 2.941 million in December. That was the lowest amount since 2.228 million in January 2014. The Oil Ministry blamed two weeks of bad weather in the south for the decline, but there were two other issues at play as well. One was that the Basra ports began receiving oil from the Halfaya field in Maysan that does not produce as high quality crude as other fields. That led some buyers to refuse the oil. The second was that exports to Turkey were down from 180,000 barrels a day in December to 145,000 in January. All of this oil is coming from Kurdistan as part of its budget agreement with Baghdad. It stopped sending all of its quota of petroleum in January. Poor weather often hits the southern ports preventing tankers from docking there. The Oil Ministry also has facilities to mix the Halfaya oil with petroleum from other fields that would even out the quality, but because of the push to export as much as possible it is being sent directly to the ports. Finally, Kurdistan claims that it will increase its exports to Turkey later on so that by the end of the year it is meeting its quota. That’s just one of many issues that plagues the agreement between the two sides, and could lead to its collapse.


Iraq Oil Exports And Profits 2011-2014
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
$100.69
$7.582
May
2.582
$100.69
$8.077
Jun
2.423
$102.96
$7.470
Jul
2.442
$102.27
$7.742
Aug
2.375
$97.44
$7.172
Sep
2.542
$90.76
$6.916
Oct
2.432
$81.12
$6.120
Nov
2.51
$70.40
$5.25
Dec
2.941
$56.59
$5.161
2014 Avg.
2.51
$92.39
$7.013
Jan
2.35
$41.45
$3.258


Not only did Iraq witness a drop in exports, prices continued to plummet as well. The country’s crude sold for an average price of $41.45 per barrel down from $56.59 in December. That earned Iraq $3.258 billion compared to $5.161 billion in December. International oil prices have collapsed in recent months. Iraq already sells for lower prices than other producers, so it is being hit harder. This is a huge shock to an economy that was selling petroleum for over $100 per barrel just a few months ago, and the $7 billion a month average it had been earning in the last four years.

The poor showing in January bodes ill for the new 2015 budget. That is based upon 3.3 million barrels a day in exports at $56 per barrel. Even if those numbers were met there is an estimated $21 billion deficit. That looks to be much larger now. That will pose a daunting challenge to Baghdad. There are already questions about whether it will be able to cover the projected budget and if it is even larger there’s no telling what could happen.

SOURCES

Oil Marketing Company, “Iraq Crude Oil Export – December 2014,” 1/25/15

Salaheddin, Sinan, “Iraq’s oil exports dip by 14 percent in January,” Associated Press, 2/12/15

Ven Heuvelen, Lando, Ben, “Iraq financial crisis prompts emergency action,” Iraq Oil Report, 2/5/15

Van Heuvelen, Ben, Lando, Ben, Iraq, Ali Abu, al-Sai’di, Jewdat, “Oil exports fall in January,” Iraq Oil Report, 2/3/15

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