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Iraq's Southern Oil Exports Heading for Another Record

Iraq's Southern Oil Exports Heading for Another RecordIraq's Southern Oil Exports Heading for Another Record

Iraq's southern oil exports have risen above 3 million barrels per day so far in July, according to loading data and an industry source, setting shipments from OPEC's second-largest producer on course for a monthly record.

The Iraqi boost is an indication of continued high output from the Organization of Petroleum Exporting Countries, which is focusing on keeping market share rather than curbing supply to support prices.

Exports from Iraq's southern terminals averaged 3.06 million bpd in the first 23 days of this month, up from a record 3.02 million bpd in all of June, Reuters reported.

Shipments jumped in June after Iraq's decision to split the crude stream into two grades, Basra Heavy and Basra Light, to resolve quality issues. This has allowed some companies working at Iraqi oilfields to increase production.

"It looks like another strong month above the 3 million level," said the industry source, who tracks the exports. "It's very impressive what they are doing."

The southern fields produce most of Iraq's oil. Located far from the parts of the country controlled by Islamic State militants, they have kept pumping despite the conflict.

Shipments from Iraq's north via Ceyhan in Turkey have remained steady despite tensions between Baghdad and the Kurdistan Regional Government over budget payments.

The KRG, which says it has not received its share of revenues from Baghdad, has boosted independent sales and cut allocations to Iraq's State Oil Marketing Organization, say trade and industry sources. Independent KRG exports averaged 520,000 bpd in the first 23 days of July, according to loading data, while SOMO has exported one tanker and one pipeline shipment during the month, or an average of 33,000 bpd.

Taken together, this means total northern shipments are close to June's rate, even though exports under the SOMO banner have slowed to a trickle.

Iraq's growth follows investment by western oil companies in the southern oilfields and an easing of export bottlenecks. Risks include bad weather, technical problems and unrest.

 

Financialtribune.com