April 2013 saw Iraq return to its highest export levels in
the last 30 years. Unfortunately, the industry still suffers from a number of
major problems, which prevent it from being able to maintain those figures, and
reach its lofty goals. Not only that, but the price for Iraqi crude saw a dip
for that month, while problems with Kurdistan and insurgents also came up.
Those are all reasons why Iraq’s petroleum business has been at a plateau for
the last fourteen months. That doesn’t mean production is not growing, and
things won’t change, but it will just take a lot longer than the Oil Ministry
projects.
 |
| (Reuters) |
Iraq’s oil exports recovered in April after a four-month
decline. In that month, Iraq exported an average of 2.62 million barrels a day. That was up from 2.41 million barrels in March. Total exports in April
were 78.7 million compared to 77.64 million the previous month. The increase
was due to the southern pipeline through Basra, which went from 2.1 million in exports
March to 2.31 million in April. That was one of the highest amounts since the
2003 invasion. That was planned as the Oil Ministry scheduled 13 more cargoes in April, 48 total, then in March. The opposite occurred in the north where
the Kirkuk line decreased from 316,100 in March to 306,600 in April. The flow
through that pipeline has been down since reaching a high of 451,600 in October
2012, because the Kurdistan Regional Government (KRG) stopped its official
exports over a dispute over payments with Baghdad. Instead, the Kurds are now
trucking petroleum to Turkey. In April that reached almost 60,000 barrels a day. Not only that, but the first shipment of Kurdish oil was sold on the international market that month. The central government considers those
exports illegal, and has constantly threatened legal action to stop them, but
nothing has happened. April seemed like an encouraging month for the Oil
Ministry. Exports were back to what they were at the end of 2012, which marked
the highest levels in 30-years. Unfortunately, that was still below the 2.9 million barrel mark set for the year. Few analysts believe that amount is
attainable this year, because Iraq faces so many problems. One is that exports
continue to fluctuate up and down. In May for example, they were back down to 2.484 million. The industry is still expanding, but very slowly. For the
year, the country is averaging 2.47 million barrels in foreign sales, just
slightly more than the 2.41 million it did in 2012.
Iraq Oil Exports And Profits
2011-2013
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
|
$7.45
|
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
|
$7.831
|
Jun.
|
2.40
|
$90.09
|
$6.487
|
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
|
$7.835
|
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
|
2013 Avg.
|
2.47
|
$103.74
|
$7.713
|
Oil
Exports Through Basra 2012-2013
January 2012 1.711 mil/bar/day
January 2012 1.711 mil/bar/day
February 1.639
mil/bar/day
March 1.917
mil/bar/day
April 2.115
mil/bar/day
May 2.086
mil/bar/day
June 2.085
mil/bar/day
July 2.216
mil/bar/day
August
2.252 mil/bar/day
September
2.178 mil/bar/day
October
2.172 mil/bar/day
November
2.122 mil/bar/day
December
2.022 mil/bar/day
January
2013 2.093 mil/bar/day
February
2.196 mil/bar/day
March 2.1
mil/bar/day
April 2.31
mil/bar/day
Oil Exports Through Kirkuk 2012-2013
January
2012 393,500 bar/day
February
375,800 bar/day
March
400,000 bar/day
April
393,300 bar/day
May 364,500
bar/day
June
316,600 bar/day
July
300,000 bar/day
August
312,900 bar/day
September
420,000 bar/day
October
451,600 bar/day
November
426,600 bar/day
December
325,800 bar/day
January
2013 264,500 bar/day
February
339,200 bar/day
March
316,100 bar/day
April
306,600 bar/day
A more troubling issue was the fact that prices for Iraqi
crude dropped in April. One barrel sold for an average of $98.70, compared to
$103.76 the previous month. That meant Iraq earned $7.764 million for April,
down from $7.772 million in March despite the increase in exports. This was the
first time prices dropped below $100 per barrel since July 2012. Overall, it
was the third time that occurred in the last 26 months. For the year, prices
for Iraqi petroleum are down from 2012, and so is the monthly revenue. If that
trend continues that could be problematic for Iraq, which relies upon oil for
90% of its revenue.
There are many other problems that the oil industry faces,
one of which is that it remains a target. On April 25 for instance, the northern pipeline was bombed in the Shirqat area of Salahaddin province. Insurgents have attacked the line nearly every month this year. Before that the
Kurdistan Workers Party (PKK) in Turkey was blowing it up regularly. The Kirkuk
line is already operating at below capacity. It also suffers from a lack of
maintenance, which often leads to leaks, and other issues. The constant
bombings just adds to those already existing difficulties.
More importantly, Iraq suffers from major structural and
environmental impediments to the growth of its energy sector. Bad weather in
the south constantly stops tankers from docking at its ports. There is a lack
of pumping and pipeline capacity, and not enough storage facilities. Government
red tape holds up the importation of materials and workers, and there are not
enough trained Iraqis. All this means that Iraq’s oil sector cannot grow as
fast as the government hopes. The nation has such huge potential, but much of
it is going untapped due to these barriers. Those are the major reasons why
Iraq continuously misses the goals it sets for itself.
For now, Iraq’s oil industry is holding steady. April’s
exports saw a return to the highs of 2012, but that proved unsustainable. A
bigger issue was that prices and profits have dropped since last year. Baghdad
is working on its bottlenecks slowly but surely. If the value of Iraqi crude
plummets however, any increases in production will not only be offset by lower
revenue, but could contribute to oversupplying world markets and driving down
prices more. Iraq’s planning is notoriously poor, and all the government is
currently focusing upon is pumping as much petroleum as possible as quickly as
it can. That’s based upon the theory that the demand for energy will continuously
increase. That’s not so true today. While developing countries like China are
seeing a large increase in the amount of oil that it uses, the West is actually
producing more petroleum of is own, and cutting back on demand. Right now this
has not become an issue, but Iraq will eventually have to deal with the
consequences of its policies.
SOURCES
Ajrash, Kadhim and Razzouk, Nayla, “Iraq Revises Its Oil
Reserves to 150 Billion Barrels,” Bloomberg, 4/10/13
Aswat al-Iraq, “Iraqi oil pumping to Turkey stopped by
explosion,” 4/25/13
Bloomberg, “Iraq to Increase Basra Oil Shipments in April,”
Iraq Business News, 4/2/13
Donati, Jessica and Mackey, Peg, “Iraqi Kurdistan sells
first crude, defies Baghdad,” Reuters, 4/5/13
Al Jazeera, “Gunmen attack Iraq gas field,” 4/2/13
Mohammed, Aref, “Protests heat up near Iraq’s West Qurna-2
oilfield,” Reuters, 4/16/13
Press TV, “Iraq threatens to take legal actions against
Turkey over KRG oil deals,” 4/5/13
Al-Rafidayn, “Iraqi Kurdistan has doubled its oil exports
and ignore Baghdad,” 4/24/13
Republic of Iraq Ministry of Oil,
“The Iraqi Ministry of Oil Declares its Export for April 2013,” 5/23/13
Reuters, “Bottlenecks put brakes on Iraq’s oil export
growth,” 4/12/13
- “Iraq cements position as
second-biggest Opec oil exporter,” 4/30/13
- “Iraq May oil exports fall to
2.484 m bpd,” 6/4/13
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