Tuesday, January 14, 2014

Iraq’s Oil Industry Stagnant In 2013

 
Despite hopes for continued growth, Iraq’s oil industry was stagnant in 2013. It not only exported less oil than 2012, but it didn’t earn as much either. That hasn’t stopped the Oil Ministry from predicting huge expansion in 2014. Most of the major oil fields in the south are going to increase production this year, but that can’t be exploited unless the government’s infrastructure projects are completed on time. There are several large ones that are to be finished by this summer. Baghdad has never done anything on schedule however, but they will eventually be finished, and when they are there will be a surge in oil exports. Until that happens Iraq will continue with its current 22-month plateau.

Iraq’s oil sales and revenue in 2013 were below its 2012 marks. For the year, Iraq averaged 2.388 million barrels a day in exports. Its crude sold for an average of $102.33 per barrel, which earned it an average of $7.434 billion per month. In total it made $89.231 billion in 2013. Those were all below 2012 when it averaged 2.41 million barrels in exports at $106.20 per barrel, which made it $7.835 billion per month, and $94.031 billion for the year. At the beginning of 2013 it looked like there would be a large jump in output when exports reached 2.62 million in April, but then it quickly fell and never recovered. Prices also dropped to below $100 a barrel from April to June when commodity traders believed that the Middle East was becoming more stable. Overall, the highest average price was $107.66 in February compared to $117.99 per barrel in March 2012. That accounted for the drop in profits. As for exports, the major cause for the decline was attacks and leaks that plagued the northern Kirkuk pipeline to Turkey, and the end of Kurdish contributions. In 2012 the Kurdistan Regional Government stopped exports through the Kirkuk line over disputes with Baghdad over paying companies that operated there. Then in 2013 the northern line exported an average of 264,200 barrels compared to 373,300 barrels in 2012. From June to July its oil flow dipped below 200,000 barrels a day when it faced non-stop leaks. According to the Northern Oil Company there were also 54 attacks upon the line by insurgents and oil smugglers in Ninewa and Salahaddin. In comparison, the south did see moderate growth going from an average of 2.042 million barrels in 2012 to 2.16 million in 2013. That latter figure would have been higher if not for repair work done in Basra from September and October. Iraq’s oil exports have not seen any real expansion since March 2012 when new mooring points were opened in the Basra. Without new infrastructure the country will continue on its current plateau. 


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
$7.47
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
$8
Jun.
2.40
$90.09
$6.453
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
$7.846
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
May
2.48
$97.23
$7.477
Jun.
2.32
$97.40
$6.799
Jul.
2.32
$101.00
$7.272
Aug.
2.57
$104.45
$8.356
Sep.
2.07
$104.87
$6.511
Oct.
2.25
$102.57
$7.169
Nov.
2.381
$102.57
$7.238
Dec.
2.341
$102.90
$7.471
2013 Avg.
2.388
$102.33
$7.428



Oil Exports Through Basra 2012-2013
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
2012 Avg. 2.042 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
May 2.19 mil/bar/day
June 2.13 mil/bar/day
July 2.32 mil/bar/day
August 2.30 mil/bar/day
September 1.90 mil/bar/day
October 2.06 mil/bar/day
November 2.281 mil/bar/day
December 2.081 mil/bar/day
2013 Avg. 2.16 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
2012 Avg. 373,300 bar/day
January 2013 264,500 bar/day
February 339,200 bar/day
March 316,100 bar/day
April 306,600 bar/day
May 283,800 bar/day
June 193,300 bar/day
July 180,600 bar/day
August 270,900 bar/day
September 250,000 bar/day
October 193,000 bar/day
November 309,00 bar/day
December 260,000 bar/day
2013 Avg. 264,200 bar/day

Baghdad has big plans for 2014, but it has never been able to meet its benchmarks. The 2013 budget for example, called for an average of 2.9 million barrels a day in exports. That was impossible after the Kurds stopped exporting in 2012. The 2014 draft budget calls for 3.4 million barrels in exports, but that again includes Kurdish exports, which is no closer to reality as it was in 2013. Still, the Oil Ministry has some major projects that are to be completed this year including new single point mooring ports and undersea pipelines in Basra. Without that the planned production increases at Badra, Gharraf, Halfaya, West Qurna 1 and 2, Zubayr, and Rumaila cannot be exploited, and will have to be ramped down, because Iraq lacks adequate storage facilities for excess output.

There’s no question that Iraq’s oil industry will grow, it will just be at a much slower rate than the Oil Ministry plans. Work is being done on the country’s major petroleum fields, infrastructure is being renovated and expanded. Unfortunately, government bureaucracy and red tape holds up contracting, imports, and visas, and then everything becomes backlogged. Hopefully by the second half of 2014 exports can grow and prices will have remained high, because Iraq needs so much in terms of rebuilding and development, and oil revenues fund all that.

SOURCES

Kakakhan, Aram, “Iraq Draft Budget Littered With Mines Against Kurdistan,” Rudaw, 12/28/13

Al-Najaf, Kamaran, Lando, Ben, and staff, “Oil exports end 2013 down but banner year ahead,” Iraq Oil Report, 1/3/14

Republic of Iraq Oil Ministry, “Crude Oil Exports”

Reuters, “Iraq oil exports average 2.341m bpd in December,” 1/2/14

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