Wednesday, October 21, 2015

Iraq’s Oil Exports Down For 3rd Month Due To Breakdown Of Deal With Kurds


Iraq’s oil exports and revenue dropped for the third straight month in September 2015. The country has been hit by two concurrent negative trends. The first is that the Kurds are contributing less and less to the central government’s oil flow as the budget deal between the two sides has collapsed. Second, the glut in world petroleum production has led to a steady decline in prices. Together they are adding to Iraq’s financial troubles as it had a poorly planned budget, and has added costs with the war against the Islamic State and the humanitarian crisis it has wrought.

In September 2015 oil sales took another hit. The country exported an average of 3.052 million barrels a day. That was down from August’s 3.079 million, July’s 3.104 million, and June’s 3.187 million exports.

Those earlier numbers were achieved due to increased outflow from Basra’s ports and the contributions of the Kurdistan Regional Government (KRG). In June, exports from southern Iraq surpassed the three million mark with 3.022 million barrels a day, a new high. In July that went up to 3.064 million, but has declined since then with 3.021 million in August, and 3.03 million in September. At the same time, the budget deal with the Kurds finally broke down. By May the KRG was contributing 451,000 barrels a day to the Oil Ministry’s sales, but that has dramatically dropped off since then. By September the Kurds were only contributing 21,500 barrels to the central government, while exporting 600,463 barrels a day independently. The Kurds were supposed to contribute a set amount of oil each month, and in return Baghdad was to pay the region its 17% of the budget. Neither side met their obligations, which led to recriminations and the eventual collapse of the agreement.

At the same time that exports have dipped so have prices. In September a barrel of Iraqi crude sold for $40.32. That was the lowest price so far this year. In May Iraq had the highest price of 2015 at $55.87 per barrel, but that has dropped since then with $55.32 in June, $50.99 in July, and $40.59 in August. Along with the decline in exports that has hurt revenue, which went from $5.447 billion in May down to $3.692 billion in September.

The decreasing income could not come at a worst time, but it was something that Iraq’s government failed to plan for. Currently Baghdad is facing huge bills as it has to fight the Islamic State and deal with the 3 million displaced that has created. That situation is made worse by the fact that the government included unrealistic numbers in its budget for oil exports and revenue, which provides roughly 90% of funds. Even if the Oil Ministry had met its quotas there was going to be a deficit, and now that has sky rocketed with the falling output and prices. Baghdad has not adequately dealt with that either, causing even more problems.

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
$55.32
$5.289
Jul
3.104
$50.99
$4.908
Aug
3.079
$40.59
$3.874
Sep
3.052
$40.32
$3.692
 


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
Aug 3.021 mil/bar/day
Sep 3.03 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
Aug 50,900 bar/day
Sep 21,500 bar/day

SOURCES

eKurd, “Iraqi Kurdistan News in brief – October 5, 2015,” 10/5/15

Lando, Ben, Osgood, Patrick, Van Heuvelen, Ben, Iraq, Ali Abu, “September exports flat as Baghdad loses oil to KRG sales,” Iraq Oil Report, 10/1/15

Salaheddin, Sinan, “Iraq’s economy, beaten by Islamic State war and low oil prices, struggle amid rising protests,” Associated Press, 8/18/15

No comments: