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Iraq’s oil exports from its southern ports are heading for a new record this month if they continue the pace set so far in August, which would be the second consecutive month of setting records in southern oil exports, Reuters reported on Tuesday, citing industry sources who have been tracking shipment data.
Between August 1 and 19, Iraq’s southern oil exports averaged 3.7 million bpd, an increase of 160,000 bpd from the previous record of 3.54 million bpd set in July, an industry source who has compiled ship-tracking data told Reuters.
According to a second source, the oil exports from Iraq’s south have been at least 3.6 million bpd on average so far in August.
In July, Iraq’s exports from the south averaged 3.543 million bpd, slightly up from the June exports of 3.521 million bpd.
If the pace of exports continues this month, Iraq will set a new record in its exports from the south in August—a sign that the OPEC’s second-largest producer is following through the cartel’s decision to ease compliance rates, or in other words, to boost oil supply and offset production losses.
Before OPEC’s decision in June to increase supply, Iraq had been ramping up exports from its southern ports to compensate for lost exports in the north. Around 300,000 bpd of crude oil previously pumped and exported in the Kirkuk province have been shut in since the Iraqi federal government moved in October to take control over the oil fields in Kirkuk from Kurdish forces.
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According to shipping data obtained by Reuters, exports from the north have averaged 350,000 bpd so far in August, up from 300,000 bpd in July, but still well below the 500,000 bpd in early 2017.
Iraq’s crude oil production rose to its highest level in 13 months in July—to 4.46 million bpd, Platts quoted the Iraqi State Oil Marketing Organization (SOMO) as saying earlier this month. That’s the same number that Iraq reported to OPEC for its July production, but according to OPEC’s secondary sources, Iraq’s production in July was 4.556 million bpd, up by 24,100 bpd from June.
Iraq is also seeking to attract more clients in Asia and it has reduced the official selling price (OSP) for its flagship Basrah Light grade for September loadings to less than the rival Saudi Arab Medium grade for the first time in five months, Platts reported earlier this month.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
Iraq could raise its production to 4.8 mbd this year if it can reach some accommodation with the Kurdistan Regional Government (KRG) whereby oil from Kirkuk oil fields could be exported through Kurdistan oil pipelines to Ceyhan on the Turkish Mediterranean coast.
With help from foreign oil companies such as CNPC, BP, ExxonMobil, ENI and Chevron, Iraq hopes to raise its oil production from the current 4.47 mbd to 6-7 mbd by 2021. It also hopes to raise its exports from 3.875 mbd to 5-6 mbd by that time.
To achieve that level of exports, Iraq needs urgently to expand its export capacity through new export pipelines and terminals on the Gulf beyond the current capacity of 4 mbd.
The only available oil-export pipeline is the Iraqi-Turkish pipeline (ITP) from Kirkuk to Ceyhan on the Turkish Mediterranean coast with capacity of 1.6 mbd but it is currently out of action. Iraq’s oil ministry announced that it is planning to build a new pipeline to replace the ITP.
Iraq should also give priority to extending the Iraq strategic oil pipeline to the Jordanian port of Aqaba on the Red Sea, possibly with similar capacity to the ITP.
Dr Mamdouh G Salameh
Intwrnational Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London