Iraq Crude Exports Fall for Second Month

Source: Bloomberg 7/22/2013, Location: Middle East

Iraq's crude exports and oil revenue declined in June for the second consecutive month because of foul weather at the country’s ports and attacks on northern pipelines, the oil ministry said.

Shipments from OPEC’s second-largest producer after Saudi Arabia dropped to 69.8 million barrels, Asim Jihad, a ministry spokesman, said in an e-mailed statement. Exports in June generated $6.8 billion in revenue, he said, and equalled 2.33 million barrels a day. Iraq shipped 76.9 million barrels in May and 78.7 million in April, earning $7.48 billion and $7.76 billion, respectively, according to the ministry’s website.

Last month’s decrease in sales stemmed from sabotage of the pipeline network from Iraq’s northern oil hub of Kirkuk to the Turkish port of Ceyhan, together with high winds and dust storms that halted tanker loadings at southern terminals, Jihad said. In addition, the country’s self-governing Kurdish region has stopped exporting since December amid a dispute between Kurdish authorities and the central government.

"I expect July crude exports to drop also, because of the continued attacks on the pipeline and as repair works and maintenance seem to be struggling to maintain the integrity of the line,” said Saadallah al-Fathi, a Dubai-based former head of the Energy Studies Department at the Organization of Petroleum Exporting Countries in Vienna. “Any halt to the exports, even for one day, is a concern for Iraq and benefits other producers because there is plenty of crude in the world."

Crude Reserves
Iraq, with the world’s fifth-largest proven oil reserves, has been boosting output and rebuilding its economy. Exxon Mobil Corp. (XOM), OAO Lukoil (LKOH) and other international companies helped boost crude production by 24 percent in 2012. Monthly exports reached 81.3 million barrels last October, the most since U.S.-led forces toppled Saddam Hussein from power in 2003.

The government said today it plans to set up three new companies to provide oil and natural gas services and transportation with a combined capital of 500 billion dinars ($429 million), according to its official website.

Iraq last month exported 64 million barrels from the southern port of Basra and 5.8 million barrels from Kirkuk, according to Jihad, the spokesman. It earned an average price of $97.41 a barrel in June, he said.

"It is known that Iraq has an average of 50 days of bad weather a year in the south, but what is worrying is the attacks and the maintenance works in the north," said al-Fathi, a former adviser to Iraq’s oil ministry.

Car bombings and other violent acts are threatening to undermine the country’s stability and reconstruction efforts after decades of economic sanctions, conflict and neglect. Apart from attacking pipelines, insurgents have escalated strikes against government targets and civilians.

Hundreds of extremists, including many from the al-Qaeda terror network, escaped from two jails yesterday after coordinated deadly attacks on the facilities, lawmaker Hakem al-Zamli told reporters in Baghdad.

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