Iraq’s Oil Exports And Revenues Take A Slight Dip In May 2012

In April 2012, Iraq saw a large increase in its oil exports due to two new terminals in Basra opening. That resulted in the highest earnings since 1989. As ever though, the country was not been able to maintain that rate, because in May there was a slight dip in output, coinciding with a drop in international prices. Still, Iraq is pumping more petroleum and shipping it out at a higher rate than it has done in years.

May’s petroleum numbers were slightly down from the previous month's. In May, Iraq exported an average of 2.45 million barrels a day. In total, it shipped out 75.95 million barrels. That was up from April’s 75.25million. The extra day in the month led to a slight drop in the average however from 2.508 million barrels a day last month. World petroleum prices also took a drop in May leading to revenues going from $8.8 billion in April to around $8 billion in May. April was a landmark for Iraq as it was the most the country had earned from oil since before the 1990 invasion of Kuwait. According to officials, the reason why exports were down was because of maintenance in Basra, which is Iraq’s workhorse carrying around three-quarters of the country’s flow of oil to foreign markets. In the first 18 days of May, Basra exported an average of 1.94 million barrels a day, which was below the 2.11 million it saw in April. At the end of the month, the Oil Ministry also claimed it diverted a larger portion of production to domestic needs than exports. That could've been a reason why the flow through the northern pipeline was down as well. May was not a marked decline from April. Last month’s output was still far above last year’s, and foreign companies continue to boost output overall. Iraq’s oil industry has always had peaks and valleys, and the last few months were no exception.

Iraq Oil Exports And Profits 2011-2012

Month	Avg. Exports (Mil/ Bar/ Day)	Avg. Price Per Barrel	Revenue (Mil)
Jan. 11	2.16	$90.78	$6.082
Feb.	2.20	$98.44	$6+
Mar.	2.15	$107.13	$7.167
Apr.	2.14	$114.26	$7.342
May	2.22	$108	$7.45
Jun.	2.27	$105.16	$7.173
Jul.	2.16	$108.80	$7.3
Aug.	2.19	$104.92	$7.124
Sep.	2.10	$104.89	$6.619
Oct.	2.08	$104.43	$6.742
Nov.	2.13	$106.59	$6.833
Dec.	2.14	$106.18	$7.061
2011	2.16	$104.96	$6.907
Jan. 12	2.10	$109.08	$7.123
Feb.	2.01	$112.92	$6.595
Mar.	2.31	$118	$8.475
Apr.	2.50	N/A	$8.8
May	2.45	$105	$8

Oil Exports Through Basra 2012

January 1.712 mil/bar/day

February 1.711 mil/bar/day

March 1.92 mil/bar/day

April 2.12 mil/bar/day

May 2.08 mil/bar/day

Oil Exports Through Kirkuk 2012

January 393,500 bar/day

February 375,000 bar/day

March 400,600 bar/day

April 387,000 bar/day

May 366,000 bar/day

Last month was a disappointment for the Iraqi government. The Oil Ministry was hoping that it could achieve a 20% increase in exports through Basra in May. It wanted to load seven more tankers than in April. Overall, exports were supposed to reach 2.53 million barrels a day as well. With a second mooring point opening in the south, it was completely reasonable for Baghdad to expect its petroleum numbers to continue to rise, but that was not to be. For the year, the Ministry wants to achieve 3.4 million barrels a day in production, and 2.6 million barrels a day in exports. With a third mooring due to start operating in a few months, this could be one of the rare times when Iraq actually reaches its goals. The country has always set high marks, but its lack of infrastructure, attacks by insurgents, bad weather, maintenance, and bottlenecks have always prevented it from obtaining them. Some of those problems are finally being addressed, and Iraq’s output can expect continued growth.

What Iraq has been able to achieve is surpassing Iran in exports. Iran is the second largest exporter in the Organization of the Petroleum Exporting Countries (OPEC). In the first quarter of the year however, Iraq passed it with an average of 2.145 million barrels a day, compared to 2.1 million for Iran. Tehran’s output has been cut, because of international sanctions over its nuclear program. More are expected to go into affect over the coming months, so its exports are going to drop more, opening the door for Iraq to pass it. When Baghdad welcomed the return of foreign energy companies in 2009, it was hoping to become a major player in international oil markets once again. Three years later it’s starting to reach that level. 

Iraq’s oil exports will continue to fluctuate like they always have. The country still has a severe shortage of infrastructure, and other issues that continuously affect output. Despite that, foreign companies have given a huge boost to production levels. Iraq still needs millions of dollars in new pipelines, ports, storage facilities, etc. to fully exploit these increases. That will take years to complete, but in the meantime it is benefiting from high prices, which will provide it with a steady flow of cash, that accounts for 90% of the nation’s revenue. In the long run, Iraq’s petroleum industry will grow. It’s just a question of how long and by how much.

SOURCES

Agence France Presse, “Iraq April oil exports highest since 1989,” 5/1/12

- “Iraq oil income drops on lower prices,” 6/2/12

Associated Press, “Iraq’s oil exports drop by 2.2 percent in May,” 6/3/12

Lawler, Alex and Mackey, Peg, “Iraq’s southern oil exports fall from record in May,” Reuters, 5/18/12

Lando, Ben and Staff, “$39B in oil revenue through May, though exports drop,” Iraq Oil Report, 6/4/12

Rasheed, Ahmed, “RPT-UPDATE 2-Bad weather still slowing Iraq Basra oil exports-source,” Reuters, 6/4/12

Razzouk, Nayla and Dipaola, Anthony, “Iraq Oil Output Beating Iran Ends Saddam Legacy,” Bloomberg, 5/11/12

Su, Sherry, “Iraq to Boost Basrah Light Exports for Second Half of May,” Bloomberg, 5/17/12