Iraq's oil revenues still strong despite dip

24 October 2011

Baghdad has raked in over $10bn more so far in 2011 than the whole of 2010

Iraq’s oil revenues continue to increase year-on-year and this will be welcomed by a government in Baghdad that is starting to feel the economic strain of rebuilding the country.

Total revenue from oil exports for 2011 now stands at $62.4bn compared with $52.2bn in 2010.

However, total crude exports and oil receipts dipped by 7 per cent in September following the shutdown of the northern oil export pipeline and reduced production at the southern Rumaila oil field.

According to data released by the Oil Ministry, total exports in September reached 63.1 million barrels, down 7 per cent compared with 67.9 million in August.

Exports from the north of Iraq, through a pipeline to the Turkish port of Ceyhan, dropped to 10.1 million barrels or 330,000 barrels a day (b/d) from 14 million barrels or 476,000 b/d in August. Production in the northern Kurdish region, which usually accounts for as much as 150,000 b/d, dropped to 55,000 b/d.

With oil prices largely stable, just over $104.9 a barrel for a second month, total oil receipts from exports of 2.10 million b/d to the Gulf, the Mediterranean and Jordan dropped to $6.619bn, compared with $7.124bn in August.

Oil prices are expected to dip slightly in 2012 to around $90 per barrel, but increased production is expected to more than make up for reduced revenues.

Investment in the oil infrastructure is continuing to push up production, but there is growing discontent in the Basra and Kurdistan regions that they are not being allowed to run their respective oil industries with more autonomy.

Sources working in the Iraq oil industry say that Baghdad is retaining control, but also voice fears about how long this can last without a transparent and mutually beneficial oil law that every party is happy with.

Problems are being exacerbated in the Kurdistan with technical problems in the infrastructure. The Kurdistan Regional Government (KRG) halted oil exports on 11 September, blaming the drop in production on the technical problems caused by state-owned North Oil Company, which operates the export pipeline.

The oil industry’s infrastructure is in need of almost total refurbishment with problems ranging from old pipelines in the north of the country to large areas of unexploded mines that need to be cleared from the south.

Gulf exports also dropped slightly with about 53 million barrels, down from 53.6 million barrels in August. This dip was caused after production in the south of the country was briefly disrupted by a fire at a gas compression unit at Rumaila, Iraq’s largest oil field, being developed by UK oil major BP, along with China National Petroleum Corporation.

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