Iraq Returns as World's Fastest-Growing Oil Exporter

MarineLink.com
Wednesday, March 05, 2014

By Alex Lawler and Peg Mackey, Reuters

Iraq is reclaiming its rank as the world's fastest-growing oil exporter, cushioning consumers from Libyan supply outages for now and, perhaps, reviving OPEC market share rivalries down the road.

Despite worsening violence due to spillover from the war in Syria, Iraq - already OPEC's second-largest producer - is likely to post one of the biggest annual output jumps in its history as BP, Exxon Mobil and other companies tap its southern fields, which are untouched by the unrest.

With many export bottlenecks now cleared at the southern Basra terminals - from which almost all of Iraq's crude is shipped - Baghdad is expected to keep up, or even exceed, the rapid pace of oil sales reached in February - at 2.8 million barrels per day (bpd), a 500,000 bpd rise on the previous month.

"Iraq is doing its best to export as much as possible and directionally things are improving," said a senior oil executive from a major oil company at work in Iraq.

So much so that, after momentum slowed last year, many in the industry expect a significant increase in 2014 from the country that holds the world's fifth-biggest oil reserves.

"We think the average for the year is probably going to be about 2.9 million bpd, so maybe in the latter part of the year there will be a little bit more than that," said a Western oil executive from another company working in Iraq.

If Baghdad can sustain oil sales of 2.8 million bpd, its revenue could swell to more than $100 billion at $100-a-barrel oil. Average exports of just under 2.4 million bpd last year earned Iraq $89 billion.

So far, the leap in Iraqi shipments has yet to weigh on oil prices and is being welcomed by other members of the Organization of the Petroleum Exporting Countries (OPEC), as it is making up for outages in Libya and reduced exports from Iran due to Western sanctions.

"As long as Brent is $100-$110 there is no problem for OPEC and the higher volumes from Iraq are welcome," said a Gulf OPEC delegate. "Their crude is required."

Another delegate agreed, while indicating that view could change should output recover elsewhere.

"When the situation is settled in Libya with production of 1.5 million barrels per day and Iranian crude comes back, it will have an impact on prices. But not now."

Oil Revival
The world's leading oil companies have been expanding Iraq's giant southern fields - Rumaila led by BP, West Qurna-1 run by Exxon and Zubair operated by Eni - since 2010 when they signed a series of service contracts with Baghdad.

That revival, now into its fifth year, prompted Iraq to set an export target of 3.4 million bpd for 2014, including 400,000 bpd from the Kurdistan region, implying output of 4 million bpd, including oil used internally.

Oil experts still see that as optimistic. But growth is returning thanks to the expanded capacity at Basra and further rises from the southern fields of Majnoon, led by Shell, and Halfaya, where PetroChina is the operator.

The imminent start-up of West Qurna-2, operated by Lukoil, should boost flows further. The field is considered the world's second-largest untapped deposit.

Momentum in Iraq's oil growth slowed last year due to technical and security problems as well as a row between Baghdad and the autonomous Kurdish north. These factors could still keep the expansion in check.

The Kurds, at odds with the Iraqi central government over oil rights, stopped exporting via the national network more than a year ago. A pipeline running from Iraq's northern oilfields to Turkey is repeatedly sabotaged, disrupting exports.

Rising violence has not hit operations in the south, but Western companies at work there say deteriorating security and the distraction of end-April elections may be slowing crucial contract approvals.

Last year was Iraq's bloodiest since sectarian violence began to abate in 2008, with nearly 8,000 civilians killed. More than 700 people died in violence in Iraq in February, the United Nations said last week.

Iraq's production last year ran at around 3 million bpd, up a touch on 2012. The slowdown in Iraq, plus disruption in Libyan supply and Iranian sanctions, allowed other OPEC members - chiefly Saudi Arabia, Kuwait and the United Arab Emirates - to avoid large cutbacks in output.

OPEC has for years been able to defer difficult issues over how it divides production, as oil prices have stayed high. Officials' relaxed view of Iraqi growth is likely to change if and when Libya and Iran return.

"Iraqi production did not really grow last year but they seem to be making some sort of headway this year," said an OPEC source. "With Iraq increasing, there are issues in terms of who might have to cut back."

(Editing by Jason Neely)

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Energy

China Passes New Pollution Law, Will Cap Coal Consumption

Legislators have approved amendments to China's 15-year-old air pollution law that grant the state new powers to punish offenders and create a legal framework to cap coal consumption,

Marad Celebrates Deployment of Maritime Fuel Cell Project

The U.S. Department of Transportation’s Maritime Administration (MARAD) today celebrated the launch of field trials for the first prototype hydrogen fuel cell

Gazprom, OMV Meet on Establishing Nord Stream JV

At a Meeting held at the Gazprom headquarters between Alexey Miller, Chairman of the Company's Management Committee and Rainer Seele, Chairman of the Executive Board of OMV,

News

China Passes New Pollution Law, Will Cap Coal Consumption

Legislators have approved amendments to China's 15-year-old air pollution law that grant the state new powers to punish offenders and create a legal framework to cap coal consumption,

Marad Celebrates Deployment of Maritime Fuel Cell Project

The U.S. Department of Transportation’s Maritime Administration (MARAD) today celebrated the launch of field trials for the first prototype hydrogen fuel cell

Gazprom, OMV Meet on Establishing Nord Stream JV

At a Meeting held at the Gazprom headquarters between Alexey Miller, Chairman of the Company's Management Committee and Rainer Seele, Chairman of the Executive Board of OMV,

Logistics

Gazprom, OMV Meet on Establishing Nord Stream JV

At a Meeting held at the Gazprom headquarters between Alexey Miller, Chairman of the Company's Management Committee and Rainer Seele, Chairman of the Executive Board of OMV,

Migrant Boat Sinks off Libya; 200 Feared Dead

A boat packed with mainly African migrants bound for Italy sank off the Libyan coast on Thursday and officials said up to 200 might have died. A security official in the western town of Zuwara,

Oil Steadies as Equities Rally

Recovering stock markets boost oil prices; U.S. crude on track for first weekly gain in nine weeks. Oil prices steadied on Friday after bouncing back from six-and-a-half-year

Middle East

Oman Drydock Company Expands Rapidly

Oman Drydock Company (ODC) is growing fast. In January, the yard hit an important milestone - its 300th drydocking. Harnessing the power of its new $1.8 billion, 1.

Iranian Ship, Crew Escape Captivity off Somali Coast

An Iranian fishing vessel and its crew have escaped after being held captive for five months by Somali fishermen, maritime piracy experts said on Friday, but it

Oil Steadies as Equities Rally

Recovering stock markets boost oil prices; U.S. crude on track for first weekly gain in nine weeks. Oil prices steadied on Friday after bouncing back from six-and-a-half-year

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Pod Propulsion Port Authority Ship Electronics Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.5547 sec (2 req/sec)