For the fourth month in a row Iraq reached another new high
in oil exports. Previously this was accomplished due to the budget deal between
the central and Kurdistan regional governments. That recently broke down after
the Kurds complained about two consecutive months of low payments from Baghdad.
Iraq exported an average of 3.187 million barrels a day in
June 2015. That was a new high for the country, which had not exported those
amounts since the 1990s. It surpassed the previous highs which were achieved in
just the last few months when it exported 3.145 million in May, 3.077 million
in April, and 2.98 million in March.
The previous month’s figures were achieved by a large jump
in output from the southern ports in Basra and the budget deal with the Kurds.
In March the south exported an average of 2.71 million barrels, before dropping
to 2.62 million April, but then climbed back up to 2.69 million in May and 3.02
million in June. The Kurdistan Regional Government (KRG) also added 268,000
barrels in March, 450,000 in April, and 451,000 in May. The Bagdad-Irbil
understanding just broke down however.
Iraq Oil Exports & Revenues
2014-15
|
Month
|
Avg.
Exports
|
Avg. Price
Per Barrel
|
Earnings
|
|
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
|
$4.46
|
|
Apr
|
3.077
|
$51.70
|
$4.8
|
|
May
|
3.145
|
$55.87
|
$5.3
|
|
Jun
|
3.187
|
$55.62
|
$5.3
|
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
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
Under the Irbil-Baghdad
pact the Kurds were to export an average of 550,000 barrels a day for the
Oil Ministry, and in return the regional government would receive 17% of the
budget. The Kurds never reached that quota nor
a revised mark it set for itself of 375,000 barrels a day for the first
quarter of 2015, and then 600,000 for the rest of the year to have an annual
average of 550,000 barrels. Baghdad on the other hand, made inconsistent
payments to the regional government, and never revealed what formula it was
using to determine how much it was giving the KRG each month. In March for
example, the Kurds accounted for 8% of total exports and received $439 million
or 9% of the oil revenues from that month. In April and May the KRG made up 14%
of exports each month, but received $445 million and $430 million or 9% and 8%
of the earnings. The Kurds strenuously complained about these amounts and there
were several meetings between top officials, but nothing was resolved. The
result was that the Kurds sold most of their oil for themselves in June with
only 164,733 barrels a day for the Oil Ministry. By
June 29 the KRG had sold 9 million barrels via Turkey for itself. Both
Irbil and Baghdad are desperately short of cash with the Kurds owing a huge
amount of money to the oil companies that operate there and to their public
employees. Despite the differences the Kurds said that they were still open to
re-negotiating the terms of the budget. They would like to sell their oil
independently and then determine how much of the profits they will share with
Baghdad. The Abadi government probably wouldn’t agree to that, as it wants
central control over the energy industry.
The budget deal stood for five months, but eventually broke
down like most of these agreements tend to do. The problem was that it never
had enough details allowing each side to interpret it in their own and
different ways. The Kurds wanted 17% of the budget to be delivered each month
minus expenses, while Baghdad expected 550,000 barrels a day from Irbil. In the
end, neither side followed through with their obligations, and the tensions
that arose as a result led to its demise. The question now is whether they can
come back together to forge another compromise, because the two do need each
other as they face declining oil prices and the war with the Islamic State. The
issue then arises as to how long any deal will last.
SOURCES
eKurd, “Iraqi Kurdistan ramps up independent oil sales,”
6/29/15
Lando, Ben and Van Heuvelen, Ben, “Exports rise on Basra
boost,” Iraq Oil Report, 7/1/15
Van Heuvelen, Ben, Osgood, Patrick, and Lando, Ben,
“Baghdad-Erbil oil deal crumbling,” Iraq Oil Report, 6/29/15
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