Iraq’s oil exports leveled off in July 2015 after reaching a
new post-2003 high in June. The reason for this change was that the budget deal
between the central and Kurdistan regional governments broke down, and the
latter sold most of its oil for itself rather than Baghdad last month. Iraq’s
recent highs also contributed to a drop in prices for the last two months,
which meant revenue went down. This is the dilemma that faces the country, as
it needs to export as much as it can because it lacks other sources of making
money, but that adversely affects the amount of money it can make during a glut
in the world oil market.
Iraq’s oil exports flattened in July after a five month
climb. The Oil Ministry announced that it had exported an average of 3.104
million barrels a day in July. That was down from June’s 3.187 million.
Starting in January when exports hit a low of 2.535 million, the amount of oil
sold by Iraq began to steadily increase reaching a series of post-2003 highs.
In February it exported 2.597 million, going up to 2.98 million in March, 3.077
million in April, and 3.145 million in May. That was due to two factors. First,
Baghdad and Irbil agreed on a deal that saw the latter sell oil for the former
via its oil pipeline to Turkey in return for its share of the 2015 budget.
Second, new oil fields came on line that did not produce the same quality oil
as older ones. The Oil Ministry dealt with this issue by selling two grades of
crude, Basra Heavy and Basra Light, which turned out to facilitate more sales.
Iraq’s steady increase ended when the budget deal broke
down. At first, the Kurds were being paid by Baghdad proportional to how
much it exported. In February for example, the Kurds accounted for 11.7% of
total oil exports and received 11% of oil revenue. By May however, the KRG made
up 14% of exports, but only got 8% of the profits. In June, the Kurds announced
that they would start exporting on their own again as a result. By the middle
of July the KRG said it was not shipping any oil for Baghdad via its
pipeline. The Kurds claimed they sold an average of 516,745 barrels a day for themselves by the end of the month. In comparison, 71,017 barrels a day
were exported for the central government in July. The Oil Ministry only reported 41,000 barrels a day from the Kurds being sold in July however, which means the remainder might not have reached Turkey in time to be exported that month.
Baghdad has been able to slightly make up for the collapse
of the budget agreement with Irbil with increased flow through its Basra ports.
In January Basra was exporting an average of 2.39 million barrels a day, and by
July that was up to 3.064 million.
The two sides are holding open the door for a new arrangement
in the future, but that would likely take months of talks. Still, Finance
Minister Hoshyar Zebari announced that Baghdad had sent Kurdistan $139.5 million as
its budget payout for its June exports, and encouraged the regional government
to continue to sell petroleum for the Oil Ministry. That was unlikely to change
the matter as the Kurds accounted for 5% of exports in June, but only got 2.6%
of revenue.
Iraq has run into another problem during the summer. Its
increasing exports have helped drive down prices for crude. In May Iraqi oil
was selling for $55.87 per barrel, which was the highest mark so far this year.
Since then prices have gone down to $55.62 in June and $50.90 in July. The
global oil market has plenty of supply and Iraq is contributing to that leading
to a drop in prices. This affects countries like Iraq, which is one of the most
oil dependent in the world, because it lacks alternative sources of revenue.
Its only recourse is to try to increase production to try to bring in more
money while at the same time threatening to drive down its income even more in
the process.
Iraq Oil Exports & Revenues
2014-15
Month
|
Avg.
Exports
|
Avg. Price
Per Barrel
|
Earnings
(Bil)
|
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
|
2.535
|
$41.45
|
$3.258
|
Feb
|
2.597
|
$47.43
|
$3.449
|
Mar
|
2.98
|
$48.24
|
$4.457
|
Apr
|
3.077
|
$51.70
|
$4.8
|
May
|
3.145
|
$55.87
|
$5.447
|
Jun
|
3.187
|
$55.62
|
$5.289
|
Jul
|
3.104
|
$50.90
|
$4.908
|
2015 Oil Exports From Basra
Jan 2.39
mil/bar/day
Feb 2.29
mil/bar/day
Mar 2.71
mil/bar/day
Apr 2.62 mil/bar/day
May 2.69
mil/bar/day
Jun 3.022
mil/bar/day
Jul 3.064
mil/bar/day
2015 Oil Exports By Kurds
Jan 153,000
bar/day
Feb 306,000
bar/day
Mar 268,000
bar/day
Apr 450,000
bar/day
May 451,000
bar/day
Jun 164,733
bar/day
Jul 41,000
bar/day
Iraq Budget Payments To KRG 2015
Month
|
Kurdish % of Total Iraq Exports
|
Baghdad’s Budget Payments to KRG
(mil)
|
Kurdish % of Oil Revenues
|
Jan
|
6%
|
$208
|
6%
|
Feb
|
11.7%
|
$408
|
11%
|
Mar
|
8%
|
$439
|
9%
|
Apr
|
14%
|
$445
|
9%
|
May
|
14%
|
$430
|
8%
|
Jun
|
5%
|
$139
|
2%
|
SOURCES
eKurd, “Iraqi Kurdistan News in brief – August 1, 2015,”
8/1/15
Reuters, “Iraq’s southern oil exports hit record 3.064 mln
bpd in July,” 8/1/15
Rudaw, “Kurdish exports through Baghdad last month earned
$140m,” 7/29/15
- "Monthly report: KRG exported an average 516k bpd in July," 8/5/15
Van Heuvelen, Ben Osgood, Patrick, "KRG exports rise, but pipeline problems loom," Iraq Oil Report, 8/5/15
- "Monthly report: KRG exported an average 516k bpd in July," 8/5/15
Van Heuvelen, Ben Osgood, Patrick, "KRG exports rise, but pipeline problems loom," Iraq Oil Report, 8/5/15
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