Sunday, June 27, 2010

Iraq's Oil Industry Is At Capacity


Iraq's oil production has hit a plateau, characterized by slight fluctuations in exports over the last year and a half. In February the Oil Ministry hit a post-2003 high of 2.05 million barrels a day in exports. Since then sales have fallen to 2009 levels. In March Iraq exported an average of 1.84 million barrels, followed by 1.80 million barrels in April, and 1.88 million barrels in May. The result was that the first five months of 2010, when the country averaged 1.89 million barrels a day in exports, was little different than 2009 when there was an average of 1.88 million barrels shipped a day.

Overall production has also experienced a slow decline since the second half of last year. In 2009 the Oil Ministry produced 2.49 million barrels a day in July and August, and 2.50 million barrels in September and October. Production began to decline in November with 2.37 million barrels, 2.40 million barrels in December, 2.46 million barrels in January 2010, 2.44 million in February, 2.25 million in March, 2.38 million in April, and 2.35 million in May. That averaged out to 2.40 million barrels a day in 2009, and 2.37 million barrels in 2010.

Iraq Avg. Monthly Oil Production/Exports
Month 
Avg.
Production
(Million Bar
Per Day) 
Avg. Exports
(Million Bar
Per Day) 
Jan. 09 
2.16 
1.91 
Feb. 09 
2.32 
1.70 
Mar. 09 
2.37 
1.81 
Apr. 09 
2.37 
1.82 
May 09 
2.41 
1.90 
Jun. 09 
2.44 
1.80 
Jul. 09 
2.49 
2.04 
Aug. 09 
2.49 
1.98 
Sep. 09 
2.50 
1.95 
Oct. 09 
2.50 
1.89 
Nov. 09 
2.37 
1.92 
Dec. 09 
2.40 
1.91 
2009 Avg. 
2.40 
1.88 
Jan. 10 
2.46 
1.92 
Feb. 10 
2.44 
2.05 
Mar. 10 
2.25 
1.84 
Apr. 10 
2.38 
1.80 
May 10 
2.35 
1.88 
2010 Avg.  
2.37 
1.89 


Despite the drops in production and exports, Iraq's revenue has stayed relatively stable due to rising petroleum prices, which is a great help to the government. One barrel of Iraqi crude went for $73.39 in December 2009, $73.97 in January 2010, $73.40 in February, $76.20 in March, and $79.66 in April, before going down to $73.85 in May because of fears about the European Union. Those prices earned Iraq between $4.2-$4.4 billion a month from December to May. That's good news for Iraq's budget, which is based upon $62.50 a barrel. As a result, the government has an estimated $10 billion surplus, which will help cover the projected $19.59 billion deficit this fiscal year. 

Monthly Earnings/Prices/Production
Month Total Oil
Earnings
Price Per
Barrel 
Total Oil
Production 
Dec. 09 $4.4 bil $73.39  61.3 mil bar 
Jan. 10 $4.4 bil$73.97  59.7 mil bar 
Feb. 10 $4.2 bil $73.40 57.9 mil bar 
Mar. 10 $4.3 bil $76.20 57.1 mil bar 
Apr. 10 $4.2 bil $79.66 53 mil bar 
May 10 $4.3 bil $73.85 58.7 mil bar 


Weather, bottlenecks, and attacks upon pipelines account for the monthly fluctuations Iraq has experienced in the last few years. Otherwise the country is operating at just about capacity. That's why output has hardly changed in the last 17 months. Its aging infrastructure cannot handle much more. Luckily prices for Iraqi crude have been increasing until May, which has meant a steady income for the government. Even if prices decline more in coming months they will still probably be above the budget's mark, which will mean Baghdad will be able to finance its operations. That will give it enough time and money to hold it over until the international companies get to work with the new oil deals, and hopefully boost production. How much that will be is the real question facing Iraq's petroleum industry.

SOURCES

Agence France Presse, "Iraq oil revenue dip despite record exports," 3/23/10

Associated Press, "Iraq's Oil Exports Dip in March by 11 Percent," 4/20/10
- "Iraq's oil exports in April down 4.3 percent," 5/18/10
- "Iraq's Oil Exports Inch Up in May by About 7.4 Pct," 6/22/10
- "Iraq's oil revenues up by $300m in Dec. 2009," 1/23/10

Aswat al-Iraq, "$4.4b Iraq's oil revenues in Jan.," 2/23/10
- "Iraq's oil revenues up by $300m in Dec. 2009," 1/23/10
- "Iraq's oil sales reach $4.3 billion in May – oil ministry," 6/21/10
- "Oil ministry achieves $1 billion surplus in 2010," 5/21/10

Bayoumy, Yara, "Iraq eyes fall in deficit, investment increase," Reuters, 6/10/10

Bureau of Near Eastern Affairs, "Iraq Status Report," U.S. Department of State, 6/23/10

DPA, "Iraqi oil revenues topped 4.35 billion in March," 4/22/10

Hafidh, Hassan, "Iraq Dec Oil Exports Up 4% On Month At 1.977 Million B/D," Dow Jones, 1/4/10

Reuters, "Iraq oil exports surge to 1.9mbpd," 6/1/10

Special Inspector General for Iraq Reconstruction, "Quarterly Report to the United States Congress," 4/30/10

2 comments:

Unknown said...

Thanks for the info on this topic. After all the talk over the years about how the whole war was really about oil, its good to see how much oil is being produced now that things have stabilized. At least for now.
What was the pre-2003 Barrels Per Day at?

Joel Wing said...

Ive seen two numbers for pre-2003 oil production. The Inspector General gave a figure of 2.58 mil bar/day. Press reports right after the invasion said 2.8 mil/bar/day. Before the Gulf War production was around 3.5 mil bar/day

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