Iraqs oil exports dropped by more than 500,000 barrels a day (b/d) in September, its lowest level since February 2012, as the Oil Ministry carried out extensive upgrades at the Basra Oil Terminal. It handles most of the countrys exports. The two loading berths at the terminal are expected to remain closed until the middle of October as a new offshore oil metering and manifold platform is installed.
Shipments through Iraqs only other export route have also been intermittent due to repeated attacks on the pipeline to Turkey. The pipelines capacity is also less than 500,000 b/d.
With oil prices at more than $100 a barrel, the drop in exports to just over 2 million b/d means Iraqs revenues for the month could have fallen by more than $1.5bn compared with the $8.3bn earned in August. By early 2014, Iraqs southern export capacity will expand to 5.6 million b/d as new single-point moorings are tied in. But Iraqs oil production is expected to exceed this, meaning other export routes will be essential.
The fall in oil revenues has shown Iraqs vulnerability in relying so heavily on Basra to ship its crude
This task has been given to State Company for Oil Projects (SCOP), a subsidiary of the Oil Ministry, which plans to build a 1 million b/d pipeline through Jordan with the help of international engineering consortiums and financiers. The ministry hopes to use a build-own-operate-transfer agreement, the first of its kind in Iraq, coupling construction with a 20-year operational concession. However, the plans are already suffering delays. A tender has yet to be issued, making Iraqs hopes of reaching financial close in 2014 unlikely.
Changes in SCOPs senior management have had an impact, but more important are the delays in getting signatures from the Iraqi and Jordanian governments on the agreements required for the deal to proceed. The recent fall in oil revenues has shown Iraqs vulnerability in relying so heavily on Basra to ship its crude. This should focus minds on getting the Jordan pipeline project moving again.