July 21, 2022

WWW.ENERGYINTEL.COM

Iraq Breaks New Revenue Record as Exports Rebound

  • Basrah exports to Europe and Turkey hit their highest in 12 months as rising Russian crude flows to Iraq's traditional Asian buyers pushed more cargoes west.
  • The changing trade flows come as volumes of Basrah Heavy rise, reflecting Iraq's increasingly heavy oil production profile.
  • The Karbala refinery could finally begin operations in October, providing a welcome new outlet for Iraq's crude output.

Iraq’s monthly oil revenues hit $11.5 billion in June, buoyed by the recovery in Basrah crude exports and surging oil prices. Production topped 4.4 million barrels per day for the first time since April 2020, according to Energy Intelligence estimates.

But export constraints again stymied production plans. Output was around 100,000 b/d below Iraq's Opec-plus target of 4.509 million b/d for June and prevented Baghdad from raking in even more from exports.

After falling in May, Basrah crude exports averaged 3.26 million b/d last month, bumping up against the de facto ceiling — or close to it — after having reached slightly higher levels in February and April.

Exports of Kurdish blend via the Turkish port of Ceyhan were also down on the month at around 380,000 b/d, but they are not yet showing any significant decline despite Baghdad’s efforts to delegitimize the Kurdish oil and gas sector.

Iraq's June 2022 Production
('000 b/d)Vol.
Basrah exports3,259
Domestic refining642
Direct crude burn20
Less spiked condensate, fuel oil-45
KRG output390
Smuggling35
Exported from Kirkuk via Turkey†97
Exported from Kirkuk to Jordan*10
Stockbuild0
Total4,408

Redrawing Market Map

Rising volumes of Russian crude heading to Asia finally appear to be having a noticeable effect on Iraqi flows and are even threatening to upend the battle for market share among rival Middle East producers.

Basrah crude exports to Europe and Turkey reached 860,000 b/d last month, their highest in 12 months and almost double the volumes in January.

Basrah shipments to India in June, meanwhile, fell below 1 million b/d for the first time since October, according to Energy Intelligence estimates, while Russian crude supplies to India neared 1 million b/d last month, according to Kpler data, edging out Saudi Arabia as India’s second supplier.

India has been gorging on cheap Russian crude, with the double-digit discounts on medium, sour Urals encouraging refiners to choose it over pricier Mideast grades like Basrah Medium and Arab Light.

Iraq’s state oil marketer Somo continued to price August-loading crude exports to Asia at a hefty discount to comparable Saudi grades. But Somo slashed the formula prices for August-loading Basrah Heavy to Europe by $1.75 per barrel, while Saudi Aramco left its formula price for August-loading Arab Heavy to Europe unchanged from the previous month. This suggests a concerted push by Iraq to capture a larger share of European demand.

Created with Highcharts 9.0.0(million b/d)DESTINATIONS BY COUNTRY/REGION FOR TOTAL IRAQI CRUDE LOADINGSChinaIndiaEuropeSouth KoreaTurkeyUSOtherMay '21Jul '21Sep '21Nov '21Jan '22Mar '22May '2201,0002,0003,0004,000Source: Energy Intelligence

Getting Heavier

A potential concern for Iraq both now and in the future is the quality of Basrah crude, especially given the oil ministry’s intention to try and send more to Europe to replace Urals. Multiple sources say that the southern export stream is getting heavier, with the volume of Basrah Heavy exported in June rising to its highest since last year. A Somo source said this coincides with the bitumen season.

But traders have argued that it could be difficult to find strong European buying interest for the heavy, sour grade to offset weaker demand in China and India, which was reflected in the failed tenders to sell two cargoes in separate tenders last month.

As an indication that Iraq’s oil is getting heavier, Chinese state-owned CNOOC has raised output at the Missan cluster of fields that it operates by 50,000 b/d since September to 250,000 b/d, says a well-informed source, and it plans to bring another 50,000 b/d on stream by year's end. Missan’s API gravity is 24º-25°, he notes.

Downstream Developments

A gradual rise in refinery runs have helped Iraq to maximize oil production in the face of export constraints, while the planned commissioning of the 140,000 b/d Karbala refinery in the fall should provide a welcome new outlet for additional crude. Together these will help slash Baghdad’s costly products import bill.

Refinery throughputs reached around 640,000 b/d in June, their highest since 2019, with the Somo source saying the additions came from Baghdad’s Daura refinery and the Baiji facility, formerly the country’s largest and is now being redeveloped after it was largely destroyed by Islamic State.

On a visit to the Karbala refinery this week, Oil Minister Ihsan Ismael said Iraq would start sending crude to the refinery in October, and that once up and running the plant would allow the country to reduce its imports of oil products by 60%.

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
Q1'223.6973.2170.0620.3890.030
Q2'223.7673.2310.0980.4070.030
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
May '223.7153.1600.0970.4260.030
Jun '223.7673.2590.0970.3810.030


Iraqi Mideast Gulf Loadings, June 2022
DateVol. ('000 bbl)VesselQualityLoading PointDestinationLifter
Jun 1961DLTA EURYDICEBMBerth 3TurkeyTupras
Jun 21958GLASGOW VOYAGERBMBerth 2USMarathon
Jun 21962ATLANTIC PIONEERBHSPM 5IndiaReliance
Jun 21954BALTIC GLORYBMSPM 3South KoreaS-Oil
Jun 3961NAVE QUASARBH--PhillipinesPetron
Jun 51045AEGEAN DIGNITYBMBerth 3IndiaIOC
Jun 6995ACHILLEASBMBerth 1TurkeySocar
Jun 61037NISSOS IOSBM--TurkeyTupras
Jun 61957NEW COROLLABM--USMarathon
Jun 71004YUAN HUA HUBHSPM 1FranceExxon Mobil
Jun 71007YUAN HUA HUBMSPM 1FranceExxon Mobil
Jun 71958COSHONOUR LAKEBMSPM 2ChinaHengli
Jun 7999PSARA IBHSPM 1IndiaNayara
Jun 71023SIKINOS IBMBerth 3IndiaHPCL
Jun 8999TATAKIBHSPM 2IndiaReliance
Jun 81012SM VENUS 2BMBerth 4South KoreaGS Caltex
Jun 8679WILLOWYBMBerth 2IndiaMRPL
Jun 81999C.INNOVATORBHSPM 5South KoreaGS Caltex
Jun 9961GEM NO.5BHSPM 1BruneiHengyi Petrochemical
Jun 91952NEW FRONTIERBMBerth 4ChinaUnipec
Jun 9994KRITI DIAMONDBMBerth 3GreeceMotor Oil
Jun 9998MARAN HERMIONEBMBerth 2TurkeyTupras
Jun 9995JAG LEENABMBerth 1FranceTotal
Jun 91958XIN JIN YANGBMSPM 3ChinaUnipec
Jun 10997JAG LALITBH--IndiaHMEL
Jun 101001CAPTAIN LYRISTISBHSPM 5US--
Jun 101964NEW RESOURCEBMSPM 2ChinaUnipec
Jun 12746EURODIGNITYBM--IndiaHPCL
Jun 131009NEW TREASUREBMBerth 3EgyptEGPC
Jun 131016CLASSICBH--IndiaBPCL
Jun 13970DELTA SPIRITBM--TurkeyTupras
Jun 14970KASAGISANBHSPM 5IndiaIOC
Jun 14995KASAGISANBMSPM 5IndiaIOC
Jun 141005CENTURYBM--IndiaIOC
Jun 15927BAGHDADBM--ChinaUnipec
Jun 15975NIOVIBHSPM 1IndiaNayara
Jun 161043CONCORDBHSPM 5IndiaIOC
Jun 16970LITABHSPM 2NetherlandsExxon Mobil
Jun 161010LITABMSPM 2NetherlandsExxon Mobil
Jun 161950ALICEBMBerth 1ChinaUnipec
Jun 17958SEAWAYS TYBEEBM--South KoreaSK Energy
Jun 171961HOUSTONBHSPM 1IndiaReliance
Jun 17961PERTAMINA PRIMEBM--EuropeExxon Mobil
Jun 181961SAIQBMSPM 3China--
Jun 181966ISLAND SPLENDOORBMSPM 3ChinaSinochem
Jun 19994DILIGENT WARRIORBMBerth 2SpainRepsol
Jun 19988YASA POLARISBMBerth 2ItalyEni
Jun 20998IOANNABH--IndiaIOC
Jun 20973IOANNABM--IndiaIOC
Jun 20670NEW FRIENDSHIPBM--IndiaMRPL
Jun 21949COSBRIGHT LAKEBM--ChinaUnipec
Jun 211002UNIVERSAL VICTORBHSPM 3South KoreaHyundai
Jun 211915ELIZABHSPM 1India--
Jun 21961PASCAGOULA VOYAGERBMBerth 2USChevron
Jun 221036PSARA IBHSPM 5IndiaNayara
Jun 221920COSGRACE LAKEBMBerth 4ChinaUnipec
Jun 231052HATTERASBHSPM 1South KoreaHyundai
Jun 231959FRONT EMPIREBMSPM 2China--
Jun 23982KRITI BREEZEBMBerth 1GreeceMotor Oil
Jun 24992MARLIN SICILYBHSPM 5SpainRepsol
Jun 24996ADVANTAGE SUMMERBM--Spain PetroIneos>Cepsa
Jun 25989EXPLORERBMBerth 4ItalySaras
Jun 251949BAHLABMBerth 3ChinaUnipec
Jun 261047PATMOS IBH--IndiaNayara
Jun 27990SEA PEARLBMBerth 2EuropeShell
Jun 27965NEW EMINENCEBM--South KoreaSK Energy
Jun 27968TWIN POLLUXBHSPM 2IndiaMundra
Jun 27968TWIN POLLUXBMSPM 2IndiaMundra
Jun 281971SERIFOSBHSPM 5South KoreaSK Energy
Jun 281052KITSOSBHSPM 3IndiaIOC
Jun 28974KITSOSBMSPM 3IndiaIOC
Jun 29965JAG LOKBMBerth 4TurkeyBP>Tupras
Jun 291920OCEAN LILYBMBerth 3ChinaSinochem
Jun 291043OLYMPIC FRIND SHIPBHSPM 1SpainRepsol
Jun 29972AEGEAN DREAMBMSPM 2FranceTotal
Jun 30999SEA PEARLBHSPM 1EuropeExxon Mobil
Jun 301937DESH VIRAATBMSPM 3IndiaIOD
Jun 30991NICOLAOSBMBerth 1TurkeyTrafigura>Socar
Jun 30983C.SPIRITBHSPM 5EuropeExxon Mobil
Jun 30977C.SPIRITBMBerth 4EuropeExxon Mobil
Total ('000 bbl)97,770----------
Total ('000 b/d)3,259--BM 2,163 BH 1,096------
Source: Energy Intelligence, Kpler

Simon Martelli, London