October 13, 2022

WWW.ENERGYINTEL.COM

Iraq September Production Falls Well Short of Quota

  • Export constraints continue to hold back Iraq’s production, with delays to the commissioning of a new refinery also preventing Baghdad from hiking domestic supplies.
  • Total September crude exports dipped, with a fall in Basrah shipments mostly offset by a rise in Kirkuk and Kurdish volumes.
  • Basrah flows to India rebounded after falling sharply, but the looming EU embargo threatens to push more cheap Russian crude east, intensifying competition.

Iraq’s crude production fell 220,000 barrels per day short of its Opec-plus quota in September, according to Energy Intelligence estimates, with its aging export infrastructure preventing the country from getting anywhere near its target of 4.663 million b/d.

Iraq’s oil ministry said it had in fact reached that target.

But Energy Intelligence puts production at 4.434 million b/d last month, when an outage at the Basrah oil terminal briefly interrupted crude flows, and a hoped-for rise in new refining capacity — which would allow Iraq’s output to rise despite its export constraints — failed to materialize, according to a senior Iraqi official.

Maxed Out

The huge discrepancy arises mainly from the ministry’s claim that Iraq’s refinery runs reached an improbable 800,000 b/d in September. “It is a very high level. It is not applicable. But this figure we received from the ministry of oil,” the Iraqi official told Energy Intelligence.

Government data show federal crude exports stood at 3.29 million b/d last month, which is corroborated by Energy Intelligence loading estimates based on shipping reports and Kpler data. A fall in Basrah exports — to 3.2 million b/d — was mostly offset by a rise in Kirkuk and Kurdish crude from the north.

But the federal export level for September is very close to the ministry’s figure for May, when Iraq’s overall production was a full 192,000 b/d lower than it was last month, the government data show.

Iraq's September 2022 Production
('000 b/d)Vol.
Basrah exports3,206
Domestic refining690
Direct crude burn35
Less spiked condensate, fuel oil-50
KRG output425
Smuggling20
Exported from Kirkuk via Turkey†77
Exported from Kirkuk to Jordan*5
Stockbuild26
Total4,434

Refining Readjustments

Iraq’s Oil Minister Ihsan Ismael said on Oct. 5, after Opec-plus announced its 2 million b/d production cut in November and December, that the country’s exports would not be affected despite its target dropping by 220,000 b/d from October to 4.431 million b/d.

“Iraq's exports will not be affected by this reduction, as a result of managing internal consumption in compliance with the decision to reduce production, in order to preserve the current export capacities,” he explained.

The senior Iraqi official said refinery runs would return to “normal levels” in the coming month of around 550,000 to 600,000 b/d, adding that the new Karbala refinery, which began test runs last month, had not yet been commissioned and would probably only become operational next year.

The official also noted that cooler autumn temperatures would mean less oil demand from the country’s power stations and the small electricity generators on which many Iraqi households rely.

Choppy Waters Ahead

Like those of other major producers, Iraq’s oil sales face huge uncertainty in the coming months, as the EU embargo on imports of Russian crude and planned price cap that are due to come into force in December threaten to cause severe disruptions to trade flows and market dynamics.

Compounding the uncertainties for Iraq, the state oil marketer Somo’s respected head of crude marketing, Ali Nazar al-Shatari, stepped down this week in circumstances that remain unclear.

Basrah exports to India — the top destination for Iraqi crude over the past 18 months — have already been squeezed by the South Asian country’s strong appetite for discounted Russian barrels.

But tracking data show that Indian demand for Iraq’s key export grade rebounded in September, to at least 1.035 million b/d, up by 160,000 compared to the previous month, and that the overall percentage of Basrah crude heading to the key Asian market hit its highest level since April.

Created with Highcharts 9.0.0(million bbl)DESTINATIONS BY COUNTRY/REGION FOR TOTAL IRAQI CRUDE LOADINGSChinaIndiaEuropeSouth KoreaTurkeyUSOtherAug'21Sep'21Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'2201,0002,0003,0004,000Source: Energy Intelligence

State oil marketer Somo will likely face stiff competition in Europe from rival Mideast producers, come December. Some Iraqi crude does already appear to have found a rare outlet in northern Europe, with Total taking a cargo of Basrah Medium to Poland in September, but it is disadvantaged by its particularly high sulfur content.

Somo this month also raised its official formula price for November-loading Basrah Medium to Europe by $1.30/bbl relative to the formula price of rival Saudi grade Arab Medium, although they are priced against the physical Dated Brent benchmark and ICE Brent futures, respectively. Somo raised its formula prices for Basrah Medium to Asia by just 5c/bbl versus Arab Medium.

Iraqi Mideast Gulf Loadings, September 2022
DateVol. ('000 bbl)VesselQualityLoading PointDestinationLifter
Sep 1991SONANGOIL MAIOMBEBHSPM 5US--
Sep 1925EVEGENIA IBHSPM 3IndiaIOC
Sep 1986EVEGENIA IBMSPM 3IndiaIOC
Sep 1974DELTA SPIRITBMBerth 1IndiaIOC
Sep 11,920KASAGISANBMBerth 3IndiaIOC
Sep 11,910APHRODITEBMSPM 1USShell
Sep 21,979MARAN AJAXBM--China--
Sep 21,956ATLANTIC PIONEERBH--IndiaReliance
Sep 31,955LANDBRIDGE GLORYBMBerth 4Europe--
Sep 4971TWIN POLLUXBMBerth 2TaiwanFPCC
Sep 61,932EAGLE VERONABM--US--
Sep 61,002V.PROGRESSBM--South KoreaGS Caltex
Sep 61,936G.DREAMBH--South KoreaGS Caltex
Sep 6971ODESSABM--PolandTotal
Sep 6994SAMOSBMSPM 2IndiaHPCL
Sep 7978NISSOS SIFNOSBM--TurkeyTupras
Sep 7960PHOENIX VIGORBMBerth 4FranceExxon Mobil
Sep 71,037PSARA IBH--IndiaNayara Energy
Sep 7959ASIA DAWNBM--SingaporeShell
Sep 81,969EAGLE VERSAILLESBMSPM 1ChinaPetroChina
Sep 8957GEM NO. 2BHSPM 5South KoreaGS Caltex
Sep 91,941NEW ENTERPRISEBMBerth 1ChinaUnipec
Sep 101,981YIOBHSPM 5IndiaReliance
Sep 101,977COSHONOUR LAKEBMSPM 3US--
Sep 11973COBALT NOVABHSPM 2IndiaReliance
Sep 11992COBALT NOVABMSPM 2IndiaReliance
Sep 11960VIOLANDOBM--TurkeyTupras
Sep 121,975FRONT NAUSTABH--SpainRepsol
Sep 131,930YUAN QIU HUBMSPM 3ChinaUnipec
Sep 131,920ATHERINABMBerth 1ChinaSinochem
Sep 13981V.PROGRESSBMBerth 2South KoreaGS Caltex
Sep 13997CHIOS IBHSPM 5IndiaNayara Energy
Sep 141,011DELTA HELLASBHSPM 2ItalyShell
Sep 14963DELTA TOLMIBMBerth 2ItalySaras
Sep 151,971IRISBHSPM 1ChinaSinochem
Sep 15976CONCORDBMBerth 4IndiaIOC
Sep 15978KRITI FUTUREBHSPM 5TurkeyTupras
Sep 15910COSGLORY LAKEBMBerth 3ChinaSinochem
Sep 16981DESH VIRAATBHSPM 3IndiaIOC
Sep 16975DESH VIRAATBMSPM 3IndiaIOC
Sep 181,932NEW DRAGONBMBerth 1China--
Sep 19984ANTIGUA IBMBerth 3IndiaIOC
Sep 191,949DESH UJAALABH--IndiaReliance
Sep 19971ALSACEBMBerth 2USChevron
Sep 191,952IVONNEBHSPM 5IndiaHPCL
Sep 20960KRITI HEROBMBerth 4Greece--
Sep 21635GAMSUNOROBMBerth 1IndiaMRPL
Sep 21993C.PROSPERITYBH--South KoreaSK Energy
Sep 21968PSARA IBHSPM 5IndiaReliance
Sep 211,978MERCURY HOPEBMSPM 3China--
Sep 211,931SEA SPLENDORBMSPM 2ChinaSinochem
Sep 22989WHITE MOONBHSPM 5ItalyEni
Sep 22996MIAOULIS 21BMBerth 3Europe--
Sep 22921NISSOS RHENIABHSPM 3EgyptEGPC
Sep 22960FPMC C JADEBMBerth 2Taiwan FPCC
Sep 22967KASHIMASANBMSPM 1IndiaIOC
Sep 22998KASHIMASANBHSPM 1IndiaIOC
Sep 231,981DABABMSPM 2ChinaUnipec
Sep 25956ALSACEBMBerth 1USChevron
Sep 251,971COSRICH LAKEBMBerth 4China--
Sep 26966ELIZABETH I.ABM--ChinaRongsheng 
Sep 26967DELTA OCEANBM--France--
Sep 271,951XIN YUE YANGBMBerth 3China--
Sep 27992PATMOS IBHSPM 5IndiaIOC
Sep 271,003YUFUSANBHSPM 3IndiaIOC
Sep 271,975SPRING SPLENDORBHSPM 1ChinaSinochem
Sep 281,933NEW PROSPERITYBMSPM 2ChinaUnipec
Sep 28960NICOLAOSBMBerth 1EuropeShell
Sep 29956OCEANIABMBerth 2Europe--
Sep 29978YIOBMSPM 1India--
Sep 29987YIOBHSPM 1India--
Sep 301,957BRIGHT PIONEERBMBerth 4IndiaIOC
Sep 30921PRINCESS VANYABHSPM 3South KoreaSK Energy
Total ('000 bbl)96,192----------
Total ('000 b/d)3,206--BH 1,111 BM 2,096------
Iraqi Loadings Ex-Ceyhan, September 2022
DateVol. ('000 bbl)VesselQuality Loading PointDestinationLifter
Sep 1147PipelineKirkukCeyhanTurkeyTupras
Sep 21,000MINERVA DOXAKurdish crudeCeyhanItaly--
Sep 3570MINERVA ELLIEKurdish crudeCeyhanItalyIplom
Sep 4241PipelineKirkukCeyhanTurkeyTupras
Sep 7240PipelineKirkukCeyhanTurkeyTupras
Sep 101,000LIPARIKurdish crudeCeyhanIsrael--
Sep 11486T. SADBERKKirkukCeyhanTurkeyTupras
Sep 12600VALLESINAKurdish crudeCeyhanGreece--
Sep 15241PipelineKirkukCeyhanTurkeyTupras
Sep 151,000VILAMOURAKurdish crudeCeyhanIsrael--
Sep 18600COROSSOLKurdish crudeCeyhanGreece--
Sep 18600KRITI BASTIONKurdish crudeCeyhanRomaniaPetraco>Petrom
Sep 19241PipelineKirkukCeyhanTurkeyTupras
Sep 22600VALFOGLIAKurdish crudeCeyhanCroatiaPetraco>MOL
Sep 23241PipelineKirkukCeyhanTurkeyTupras
Sep 23700SCORPIOKurdish crudeCeyhanIsraelEAPC
Sep 241,000NEW TRUSTKurdish crudeCeyhanIsraelVitol>EAPC
Sep 24800VALLESINA Kurdish crudeCeyhanItalyAPI
Sep 27241PipelineKirkukCeyhanTurkeyTupras
Sep 271,000VILAMOURAKurdish crudeCeyhanGreece--
Sep 28600COROSSOLKurdish crudeCeyhanGreeceMotor Oil
Sep 29700NEVERLANDKurdish crudeCeyhanItalyTeseco
Sep 301,000GLORIA MARISKurdish crudeCeyhanIsrael--
Sep 30240PipelineKirkukCeyhanTurkeyTupras
Total ('000 bbl)14,088----------
Total ('000 b/d)470Of which 77 Kirkuk--------

Simon Martelli, London