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Iraq Lifts April Output, Basrah Exports Reach Limit

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AP090630014083-Iraq-Oil
  • Opec’s No. 2 producer just missed its April target of 4.41 million barrels per day thanks to a surge in domestic consumption and northern output.
  • Basrah exports are at their limit, but new equipment could raise the total export capacity by 100,000 b/d next month.
  • Baghdad earned $10.55 billion from oil sales in April, a fraction down on March but still three times average monthly earnings in 2020.

Iraq managed to hike crude production in April by almost 150,000 b/d to about 4.4 million b/d, according to Energy Intelligence's estimates, helping to close the widening gap between Opec-plus’ monthly targets and actual output.

Iraq came just 15,000 b/d short of its quota, which now rises by 47,000 b/d each month. As a serial Opec laggard, however, it has only met its target twice in the past 12 months — and more often fallen well short. For now it is unclear that the improved compliance in April will be sustained. Much depends on whether planned improvements at the offshore loading facilities in Basrah succeed.

April’s increase was largely due to a 62,000 b/d rise in refinery throughput to around 580,000 b/d, and a rise in production from the north, as reflected by the hike in exports of Kirkuk crude, neither of which will be easy to replicate.

Iraq’s refinery throughput has only topped 600,000 b/d once in the past two years, according to ministry data obtained by Energy Intelligence.

Meanwhile, April exports of Basrah crude — Iraq’s main export stream — averaged 3.28 million b/d, which an Iraqi oil official said was effectively the limit to what state marketer Somo could currently achieve.

“We can [reach our monthly target] only when Basrah exports increase. But we don’t have the export capacity. The current capacity is less than 3.3 million b/d. This is maximum," the official said.

Iraq's April 2022 Production
('000 b/d)Vol.
Basrah exports3,275
Domestic refining580
Direct crude burn10
Less spiked condensate, fuel oil-45
KRG output404
Smuggling65
Exported from Kirkuk via Turkey†100
Exported from Kirkuk to Jordan*10
Stockbuild0
Total4,399

Infrastructure Deterioration

But the Somo official noted that the oil ministry had ordered new equipment — specifically, a flexibility hose — that should raise the total export capacity of the four single point moorings off Basrah by 100,000 b/d.

The status of more substantive export infrastructure projects remains uncertain. Foremost is the replacement of two subsea pipelines connecting Fao to the Basrah jetty, described in a study completed two years ago as “an urgent necessity due to the advanced deterioration of the existing pipelines.” Existing pipes were laid in 1975.

The official said their replacement could raise the hourly pumping rate from 50 cubic meters to 70 cubic meters and add another 300,000-400,000 b/d of export capacity.

European Demand Disappoints

Basrah export destinations in April, based on shipping reports and Kpler data, do not yet show the surge in European demand for Iraqi crude as an alternative to rival Russian Urals, a trend many have anticipated.

There was a rise in Basrah exports West of Suez, but it was relatively muted at around 100,000 b/d. Shipments to India, now consistently the top destination for Basrah, held above 1.2 million b/d — after March's record high — and those to China topped 1 million b/d for the first time since January.

Some prompt cargoes of Kurdish crude, meanwhile, were struggling to sell, with specific cargoes of the medium, sour grade available at whopping discounts to dated Brent of more than $10 per barrel, traders said.

“I heard others (Greece) are still running Russian crudes and not buying, so there are a few cargoes of Kurdish crude left in May, and it is possible to see prompt cargoes with good discounts,” said a trader at a European refinery.

Also reflecting the surprisingly soft demand for Iraqi crude, Somo last month failed to award a tender to sell 2 million barrels of Basrah Medium offered in the Platts window, as reported by Reuters and confirmed by the Iraqi official. Bids had come in well below the official formula price.

The likely reason for the failure was that the cargo — loading on May 25-27 — was relatively prompt for Asian buyers, while the market was in backwardation and the official formula price for May was “very high,” the official said.

Somo this month slashed its formula prices for June-loading Basrah Medium and Basrah Heavy to Europe by $2.60/bbl and 2.40/bbl, respectively, and to Asia by $3/bbl and $3.20/bbl, respectively, following similarly deep cuts by Saudi Aramco.

The Iraqi oil official noted that some European buyers were requesting more Basrah, but he argued that it would take more time for a tangible rise in Basrah flows to Europe to become apparent, not least because most of Somo’s term contracts were with Asian buyers.

“I think within two to three months the map will change … Somo and others … will direct more barrels to Europe instead of Asia because the main consumers in Asia — India and China — [are expected] to buy the lower-priced Urals,” the official said.

Trouble Up North

Change is also afoot in northern Iraq’s oil sector, but seemingly not for the better. Relations between the oil ministry and Erbil have tumbled since the Supreme Court’s Feb. 15 ruling that the Kurdistan Regional Government (KRG) had no legal right to manage the oil resources within its territory.

Since then, the ministry has been increasing pressure on international oil companies operating in the region to submit to Baghdad's authority and bring contacts into line with Iraqi law and the court’s decision, which KRG Prime Minister Masrour Barzani has branded "unconstitutional."

Whether the ministry is prepared to jeopardize the KRG’s oil production remains to be seen, but it may well be adding to the difficulties facing sellers of Kurdish crude.

Reflecting the tensions, the North Oil Co. (NOC) — a subsidiary of the federal oil ministry — claimed on May 14 that Kurdish armed forces, accompanied by technical teams, overran the oil wells at the Bai Hassan field, a satellite of the giant Kirkuk field, which it operates and which is contested by the two sides. It charged that Kurdish forces had sought “to exploit the production of these wells for the benefit of the regional government.”

The claim was swiftly denied by the KRG.

Adding fuel to the fire, the NOC statement also suggested that Khurmala and Khor Mor, respectively the Kurdistan region’s largest producing oil and gas fields, belonged to NOC and not the Kurds.

Iraqi Mideast Gulf Loadings, April 2022
DateVol. ('000 bbl)VesselQualityLoading PointDestinationLifter
Apr 1980NAVE CONSTELLATIONBMSPM 2NetherlandsVitol
Apr 1989SEA GARNETBHSPM 1IndiaIOC
Apr 11,971COSHONOUR LAKEBMBerth 3ChinaUnipec
Apr 1989MARLIN SARDINIABMBerth 1USValero
Apr 21,958DESH VIRAATBHSPM 3IndiaIOC
Apr 3972FRIOBHBerth 2IndiaShell
Apr 41,971FRONT DUCHESSBMSPM 5ChinaSinochem
Apr 4994MARATHIBMSPM 1IndiaIOC
Apr 5972ODESSABMSPM 2NetherlandsVitol
Apr 51,932HOUSTONBMSPM 3IndiaONGC
Apr 61,025BESIKTAS BOSPHORUSBHBerth 3TurkeyTupras
Apr 6972DELTA MARIABMSPM 1Italy Saras
Apr 61,926YUFUSANBHBerth 1IndiaReliance
Apr 71,002EURODIGNITYBHSPM 2IndiaIOC
Apr 7970CELESTE NOVABHSPM 1IndiaNayara Energy
Apr 7962C. PASSIONBMBerth 3South KoreaGS Caltex
Apr 7977NOVOBMSPM 5IndiaHPCL
Apr 8949AMAZONBMBerth 1IndiaHPCL
Apr 8970DESH UJAALABMSPM 5IndiaIOC
Apr 8969DESH UJAALABHSPM 5IndiaIOC
Apr 81,979FPMC C MELODYBMSPM 3ChinaUnipec>Hengli
Apr 81,968ATLANTASBMBerth 4ChinaUnipec
Apr 8959MARAN HELIOSBMBerth 2FranceTotalEnergies
Apr 81,951FRONT KATHRINEBMSPM 2ChinaCNOOC>Rongsheng
Apr 9960T.SADBERKBM Berth 2TurkeyTupras
Apr 122,086BRIGHT PIONEERBMSPM 3IndiaIOC
Apr 121,820COSBRIGHT LAKEBMBerth 1ChinaUnipec
Apr 12970GREAT LADYBHSPM 5IndiaReliance
Apr 12960ALAGAILABMBerth 4TurkeyTupras
Apr 121,929GEM NO.5BHSPM 1South KoreaGS Caltex
Apr 13977SEAWAYS BRAZOSBHSPM 1USValero
Apr 13983PATMOS IBMBerth 2IndiaHPCL
Apr 141,929ISLAND SPLENDORBMSPM 2ChinaSinochem
Apr 14983STENA SUPERIORBMBerth 3SpainRepsol
Apr 141,010ESTEEM ASTROBHSPM 5FranceExxon Mobil
Apr 15979AYSE CBMSPM 2ItalyEni
Apr 151,979KALLISTABHSPM 1IndiaReliance
Apr 161,962NEW JOVIALITYBMBerth 4ChinaZhenhua
Apr 171,830MARAN LIBRABHSPM 3ChinaUnipec
Apr 182,011DESH VAIBHAVBHSPM 1IndiaReliance
Apr 18960MONTE SERANTESBMBerth 1GreeceHellenic Petroleum
Apr 18970TATAKIBM--IndiaBPCL
Apr 181,047CARMENBHSPM 2IndiaIOC
Apr 19974EUROVOYAGERBHSPM 5IndiaIOC
Apr 20989DELTA HELLASBMSPM 3GreeceMotor Oil
Apr 191,984OLYMPIC LIONBMBerth 2ChinaUnipec
Apr 191,942SAMAILBM Berth 3ChinaUnipec
Apr 20960SMYRNIBM Berth 2IndiaIOC
Apr 201,816MARAN THALEIABMSPM 3ChinaUnipec
Apr 201,018MAXIMBHSPM 1ChinaSinochem
Apr 20960DS VISIONBMBerth 4ChinaUnipec
Apr 21942NOVOBMBerth 2GreeceMotor Oil
Apr 21969SYFNOSBMSPM 2IndiaIOC
Apr 221,951AEGEANBMBerth 1ChinaUnipec
Apr 23989CLASSICBMBerth 3IndiaBPCL
Apr 241,984BOSTONBHSPM 2IndiaHPCL
Apr 25947V.PROSPERITYBMSPM 5South KoreaGS Caltex
Apr 25965KRITI VIGORBMBerth 3GreeceMotor Oil
Apr 25971EUROVICTORYBHSPM 3IndiaIOC
Apr 25971AMYNTASBMSPM 3ChinaPetroChina
Apr 251,920DHT BRONCOBMBerth 4USChevron
Apr 26960BARBAROSABMBerth 3ItalySaras
Apr 26955SEAWAYS DIAMOND HEADBMBerth 4NetherlandsShell
Apr 262,015NEW LAURELBMBerth 1ChinaUnipec
Apr 261,001COSGLORY LAKEBMSPM 3ChinaUnipec
Apr 27694DESH SAMMANBMBerth 2IndiaBPCL
Apr 271,931NEW PROSPERITYBMSPM 2USMarathon
Apr 271,967C.MAJESTYBHSPM 1South KoreaSK Energy
Apr 28977PSARA IBHSPM 1IndiaNayara Energy
Apr 28991SPYROSBMBerth 2ItalyEni
Apr 28981MARATHI BMBerth 4ItalyTeseco
Apr 281,959ALTAIR TRADERBHSPM 5IndiaReliance
Apr 30981RIDGEBURY LESSLEY BBH--SpainRepsol
Apr 301,960DESH VIRAATBMSPM 3IndiaIOC
Total ('000 bbl)98,276-- ------
Total ('000 b/d)3,275--BM: 2,196. BH: 1,080------
Iraqi Oil Exports
(million b/d)TotalBasrahSomo CeyhanKRG Ceyhan PipelineKRG Trucked to Turkey
Avg. 20122.4222.0490.3700.0000.003
Avg. 20132.4202.1270.2640.0000.029
Avg. 20142.6422.4580.0620.0860.036
Avg. 2015 3.4042.8440.1590.3630.038
Avg. 20163.8043.2900.0210.4920.003
Avg. 20173.8193.3030.0160.4700.029
Avg. 20183.8593.4820.0110.3490.017
Avg. 20193.9643.3990.0920.4230.030
Avg. 20203.4132.8910.0760.4060.033
Avg. 20213.4292.9490.0910.3590.030
Q2'203.4833.0140.0860.3500.030
Q3'203.1132.5470.0790.4570.030
Q4'203.2102.6960.0870.3940.030
Q1'213.3382.8410.0950.3720.030
Q2'213.3172.8390.0930.3550.030
Q3'213.4352.9580.0950.3530.030
Q4'213.6263.1590.0800.3540.030
Q1'223.6973.2170.0620.3890.030
Mar '213.2702.8260.0850.3290.030
Apr '213.2672.8200.0780.3390.030
May '213.3882.8720.0990.3870.030
Jun '213.2972.8240.1030.3400.030
Jul '213.3712.8740.0990.3680.030
Aug '213.4432.9950.0890.3290.030
Sep '213.4923.0040.0970.3610.030
Oct '213.4783.0200.0890.3290.030
Nov '213.7313.2760.0650.3600.030
Dec '213.6793.1890.0870.3730.030
Jan '223.6053.1290.0820.3640.030
Feb '223.7973.2810.0520.4340.030
Mar '223.6893.2400.0510.3680.030
Apr '223.8183.2750.1000.4130.030

Topics:
Opec/Opec-Plus, Oil Supply, Oil Demand
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