MESOP REPORT : Insurgent Attacks And Clearing Southern Waterway Lead To Drop In Iraq’s Oil Exports

01 May 2014 08:23 AM PDT – Musings o Iraq – After reaching a new post-2003 high in February, Iraq’s oil exports took a drop in March 2014. This is nothing new as Iraq’s petroleum industry often goes through ups and downs because of attacks, bad weather, maintenance work, and other issues. March was a perfect example as insurgents blew up the northern Kirkuk pipeline, and then stayed in the area to prevent crews from repairing it. In the south, the waterway around al-Basra Oil Terminal was temporarily down to remove old wrecks. Together those accounted for March’s decline.

Iraq’s exports saw a 400,000 barrel a day decline from February to March. In February Iraq reached a new high at 2.799 million barrels a day. That was the most for several decades, and highlighted Iraq’s potential. Then in March they went down to 2.396 million barrels a day. The southern pipeline to Basra, which carries the vast majority of the country’s oil flow went from 2.507 million barrels a day in exports to 2.370 million. That was due to removing shipwrecks from the area around al Basra Oil Terminal. Much more important the northern Kirkuk line to Turkey went from an average of 292,000 barrels a day in February to just 25,806 in March. The cause was militants blowing up the line several times in early March, and then attacking repair crews that went to the damaged area. With the Iraqi Security Forces’ commitments in other parts of the country it was not able to provide security for the oil workers or the pipeline, causing the North Oil Company (NOC) to give up its effort to fix the line for now. That is forcing the NOC to cut back production on the northern fields it operates such as Kirkuk, and re-inject some of the oil back into the wells because there is a lack of storage facilities. That can damage the fields, and the longer output is down the longer it can take to ramp them back up. Even when the Kirkuk line returns to operation it will be attacked again as it was blown up nearly once a week in 2013. Finally, this might kill the Oil Ministry’s plans to build a new parallel line to the Kirkuk one, because the area is simply too insecure.