Oil exports and revenue increase

Wednesday, 29 July 2009

By BEN LANDO, Iraq Oil Report

BAGHDAD – Iraq’s oil sales earned $3.7 billion in June, continuing its monthly gain since February on the backs of increased exports and rising oil prices.

Meanwhile, Iraq’s cabinet has approved a law reestablishing the national oil company to be charged with overseeing most operations. Also, Iraqi Oil Ministry spokesman Assem Jihad said the second auction, offering 10 oil fields to foreign investors, will take place by the end of November.

Tankers filling up at the Tawke field station in June 2008. (source: Ben Lando)

The Oil Ministry data show oil exports reached 1.923 million barrels per day (bpd) last month, up from 1.906 million bpd in May. Iraqi crude fetched an average $64.37 per barrel, a more than $7 per barrel increase on May.

Iraq earned nearly $62 billion in oil revenue last year and through July 22 this year’s exports have brought in $17.11 billion, according to the U.S. State Department’s most recent Iraq Status Report. It also estimated July production thus far at 2.46 million bpd and exports at 1.99 million bpd.

Oil exports posted monthly growth since February’s 1.803 million bpd year low, while the average price has climbed steadily since December’s $34.57 per barrel. Last year’s global oil price all-time highs contributed to Iraq’s earnings. The government overestimated oil prices for 2009 and has had to revise its budget three times.

Iraq consumes about 500,000 bpd domestically. In June Iraq produced a total of 2.4 million bpd, according to the global energy information firm Platts.

Iraq’s exports, split between the northern pipeline into Turkey and southern Gulf offshore terminals, increased from both directions. A small percentage is trucked to Jordan, at a discount rate to its neighbor, depending on security.

Exports north increased from 522,580 bpd in May to 526,667 bpd in June, as the Tawke and Taq Taq fields, developed by three foreign firms under a controversial contract signed by the Kurdistan Regional Government, began feeding into the pipeline to the port of Ceyhan, Turkey.

Iraq’s al-Basra Oil Terminal (ABOT) and Khor al-Amaya Terminal (KAOT) off the southern coast increased exports to 1.396 million bpd following a 1.38 million bpd showing in May. The terminals fed 1.413 million bpd to global customers in April. (Editor’s note: June buyers listed at the end of this story.)

Much of the production comes from the Rumaila field which on June 30 was awarded to a consortium of BP and the Chinese National Petroleum Corp. in partnership with the state-run South Oil Co. to increase production from today’s 960,000 bpd to 2.85 million bpd within six years.

While security in Iraq’s southern oil infrastructure has been more stable than the north – where the pipeline was nearly always bombed offline from 2003 until mid 2007 – British forces stationed at the oil terminals and training the Iraqi Navy there will be forced to leave after the Parliament this week delayed action on an extension.

While politics have affected the oil tendering process and, perhaps, security of the oil terminals, a new bill in Parliament may remove politics from many Iraq’s technical operations of the world’s third largest oil sector.

It’s not clear when the legislative body will take up the draft law reconstituting the Iraqi National Oil Co. In theory, a new INOC will run the country’s dozens of state-controlled oil firms as a proper company. Currently the companies are part of the Oil Ministry, which serves as regulator and political province as well, leading to complaints from Iraqi oil technocrats. INOC was shuttered by Saddam Hussein, who consolidated the oil power into his allied Oil Ministry’s hands.

June purchasers of Iraqi oil:

Britain: BP and Shell
China: Sinochem and Unipec
France: Total
Greece: Hellas
India: Hindustan, IOC
Italy: API Oil, Eni, ERG and Saras
Japan: Nippon and Petro-Diamond
Jordan: Jordan Petroleum Co.
Malaysia: Petronas
Morocco: Samir
Russia: Lukoil
Spain: Repsol
South Korea: SK Energy
Turkey: Tupras
United States: Chevron, ConocoPhillips, Exxon Mobil, Koch and Valero