May 11, 2012
April 2012 saw another large increase in Iraq’s
oil exports and profits. That was due to two new
oil terminals in the southern province of Basra
opening in the last two months. Iraq has some of
the largest petroleum reserves in the world. Its
problem has been the lack of investment and
inadequate and aging infrastructure, which was
caused by thirteen years of sanctions. Nine
years after the 2003 invasion of the country, it
is finally starting to address those two
problems. At the same time, the central
government is dealing with an internal dispute
about exports between it and the Kurdistan
Regional Government (KRG). The Kurds stopped
their exports in April, because it claimed that
Baghdad had not paid the companies operating
there for months. The KRG is unlikely to win
this dispute, because with oil production taking
off in southern Iraq, the central government
does not need the Kurds’ contribution as much
anymore.
In April 2012, Iraq witnessed another large jump
in its oil output. For the month, the country
averaged 2.508 million barrels a day in exports.
That was up from 2.317 million barrels in March.
In total, the country exported 75.25 million
barrels last month, compared to 71.827 million
in March. The State Oil Marketing Organization
said that April’s numbers were the highest in
decades. As usual, Basra, Iraq’s main link with
foreign markets, exported an average of 2.12
million barrels a day, a large increase from the
1.92 million seen in March, 1.711 million in
February, and 1.712 in January. In comparison,
the northern pipeline to Turkey averaged 387,000
barrels a day in April, 400,600 in March,
375,000 in February, and 393,500 in January.
Both routes continually see fluctuations in
their output due to bad weather, technical
problems, and attacks upon the northern
pipeline. The Kurds have also been contributing
to this output, but halted all exports in April.
That didn’t have a dramatic change upon the
northern pipeline’s load. In the south, output
has dramatically gone up because of two new
terminals opening up in Basra. The first started
operating in March, and the second in April. The
terminals will eventually have a capacity of
850,000 barrels a day. In total, the Oil
Ministry plans on building four floating mooring
points in Basra, which will double the possible
flow through Basra.
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
|
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
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
The country’s new infrastructure is coming
on-line just in time. In 2009, the Oil Ministry
held two rounds of auctions for petroleum
fields, which brought foreign companies back
into Iraq. Their work is finally beginning to
pay off with a huge increase in production from
the blocks that they are developing. Rumaila
field for instance, the largest in Iraq, which
is run by British Petroleum was producing 1.3
million barrels a day in April, and expects to
increase that by 250,000 barrels by the second
half of the year. Exxon has brought production
at West Qurna 1 to 406,000 barrels a day, and
wants to see that grow by 100,000 barrels by the
end of 2012. Italy’s Eni expects a similar
increase at the Zubayr field that is currently
at 254,000 barrels a day. Until the new
terminals opened, the energy companies often had
to cut production, because Iraq lacked the
pipelines to ship it out and the storage
facilities to hold it. The new terminals will
finally begin to address part of this bottleneck
issue.
April’s exports earned the country $8.8 billion,
another record high in recent years. In March it
brought in $8.47 billion, which until then was
the most the country had earned since 1989. For
all of 2011, Iraq averaged $6.9 billion per
month. While the exact amount the country earned
per barrel was not released, prices have
remained over $100 per barrel for Iraqi crude
since March 2011, because of tensions in the
Middle East such as sanctions on Iran, and the
civil conflict in Syria. Iraq relies upon oil
for 90% of its revenue, and is the most oil
dependent country in the Middle East and North
Africa.
The large amount of exports and profits poses a
dilemma for the Kurdistan Regional Government
(KRG). At the beginning of April, it announced
that it was halting all of its exports, because
Baghdad was not paying the companies operating
there. It claimed the central government owed
$1.5 billion, and that no payments had been made
for almost a year. The corporations working in
Kurdistan have had to lower production there as
a result. This is the second time the Kurds have
halted their exports over disputes over money.
Kurdish officials came to an agreement with
Prime Minister Nouri al-Maliki in November 2010
to begin foreign sales again as part of a
political deal to support his second term in
office. The Kurds were to begin exporting at
100,000 barrels a day that year,www.ekurd.net
and raise it to 175,000 barrels by 2012. With
exports taking off in the south however, there
is not as much pressure on Baghdad to give into
the KRG’s demands. Originally, the Oil Ministry
allowed the Kurds to export, because it needed
the money. That situation no longer exists. The
KRG has therefore lost its leverage in this
dispute, and will likely have to come to some
sort of compromise on Maliki’s terms. That will
leave Kurdistan with its smuggling operations to
Turkey and Iran to make money to pay energy
businesses working there. This argument severely
hampers the Kurds’ plans to expand its petroleum
industry, and draw in more foreign investors,
and favors Baghdad, which has always opposed
Kurdistan’s independent policy.
Iraq’s production and earnings can expect to see
continued growth for the next several months.
Companies are increasing their output in
southern Iraq, and more new terminals are due to
open. That will provide increased revenue for
the central government, which in turn, will give
it greater leverage vis-à-vis the Kurds. The
Iraqi government is notoriously slow and
inefficient. It has been late in paying some of
the companies working in Basra. The payment
issue with Kurdistan may just have been
bureaucratic hold-ups. Even if Baghdad was doing
it on purpose, the KRG does not hold many cards
to fight back right now. The central government
controls the purse and the export pipelines, and
now does not have as much of a pressing need to
allow Kurdistan to sell its oil abroad as it did
before its own output had jumped. That puts the
KRG in a bind. That doesn’t mean that some sort
of deal won’t be worked out in the future, but
it will be on Baghdad’s terms.
SOURCES
Agence France Presse, “Iraq April oil exports
highest since 1989,” 5/1/12
Ajrash, Kadhim and Razzouk, Nayla, “Iraq March
Crude Exports Rise to Highest Since 1980,”
Bloomberg, 4/1/12
Ajra
- “Iraq’s April Crude Oil Exports Rose to
Highest in ‘Decades,’” Bloomberg, 5/1/12
Aswat al-Iraq, “Iraqi oil exports increased in
January 2012,” 2/20/12
International Crisis Group, “Iraq And The Kurds:
The High-Stakes Hydrocarbons Gambit,” 4/19/12
Lawler, Alex and Mackey, Peg, “UPDATE 2-Iraq
seen sustaining southern oil exports surge,”
Reuters, 4/16/12
Mohammed, Aref, “Iraq south oilfields to pump
2.75 mbpd by end 2012,” Reuters, 4/20/12
Rahman, Muhammad Abdul, “Iraq’s March oil sales
highest since 1989,” AK News, 4/22/12
Rasheed, Ahmed, “Iraq approves Hormuz oil
exports contingency plan,” Reuters, 3/18/12
Reuters, “First tanker leaves new Iraq export
terminal,” 3/13/12
- “UPDATE 1-Iraq exports first oil cargo from
second offshore terminal,” 4/24/12
UPI, “DNO says production hurt in Iraq,” 4/13/12
Joel Wing, with an MA in International Relations,
Joel Wing has been researching and writing about
Iraq since 2002. His acclaimed blog, Musings on
Iraq, is currently listed by the New York Times and
the World Politics Review. In addition, Mr. Wing’s
work has been cited by the Center for Strategic and
International Studies, the Guardian and the
Washington Independent. You may visit his Blog
Musings On Iraq at musingsoniraq.blogspot.com
Copyright © 2012 ekurd.net
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