Iraq Finally Comes Back as Major Oil Producer and Exporter
Iraq is reclaiming its rank as the world's fastest-growing oil exporter, cushioning consumers from Libyan supply outages for now and, perhaps, reviving Opec market share rivalries down the road.
Despite worsening violence due to spillover from the war in Syria, Iraq — already Opec’s second-largest producer — is likely to post one of the biggest annual output jumps in its history as BP, Exxon Mobil and other companies tap its southern fields, which are untouched by the unrest.
With many export bottlenecks now cleared at the southern Basra terminals — from which almost all of Iraq's crude is shipped — Baghdad is expected to keep up, or even exceed, the rapid pace of oil sales reached in February — at 2.8m barrels per day (bpd), a 500,000 bpd rise on the previous month.
"Iraq is doing its best to export as much as possible and directionally things are improving," said a senior oil executive from a major oil company at work in Iraq.
So much so that, after momentum slowed last year, many in the industry expect a significant increase in 2014 from the country that holds the world's fifth-biggest oil reserves.
"We think the average for the year is probably going to be about 2.9m bpd, so maybe in the latter part of the year there will be a little bit more than that," said a Western oil executive from another company working in Iraq.
If Baghdad can sustain oil sales of 2.8m bpd, its revenue could swell to more than $100 billion at $100-a-barrel oil. Average exports of just under 2.4m bpd last year earned Iraq $89bn.
So far, the leap in Iraqi shipments has yet to weigh on oil prices and is being welcomed by other members of the Organization of the Petroleum Exporting Countries (Opec), as it is making up for outages in Libya and reduced exports from Iran due to Western sanctions.
"As long as Brent is $100-$110 there is no problem for Opec and the higher volumes from Iraq are welcome," said a Gulf Opec delegate. "Their crude is required."
Another delegate agreed, while indicating that view could change should output recover elsewhere.
"When the situation is settled in Libya with production of 1.5m barrels per day and Iranian crude comes back, it will have an impact on prices. But not now."Oil revival
The world’s leading oil companies have been expanding Iraq's giant southern fields — Rumaila led by BP, West Qurna-1 run by Exxon and Zubair operated by Eni — since 2010 when they signed a series of service contracts with Baghdad.—Reuters
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