Iraq’s Oil Profits Rebound In November 2011, But Complicatio
Posted: Sun Jan 01, 2012 10:59 amIraq’s Oil Profits Rebound In November 2011, But Complications With Infrastructure And Compensation Remain
Full numbers for Iraq’s November 2011 oil exports and profits were finally released, and showed a rebound on all counts after a two month dip. The price for Iraqi crude went up along with exports, leading to a rise in revenue for Iraq last montn. Despite this, Iraq’s production has still hit a plateau due to infrastructure limitations, and the country is having problems paying foreign companies that are responsible for the increases.
As reported before, Iraq’s oil exports rebounded in November after going down for the previous two months. In November, the country shipped an average of 2.13 million barrels a day, compared to 2.08 million in October, and 2.10 million in September. Last month’s average was not as high as August however, when Iraq exported 2.19 million barrels. The price of one barrel of Iraqi crude also increased from $104.43 in October to $106.59 in November.
That was the highest price since July when Iraq was selling its petroleum for $108.80 per barrel. As a result of those two factors, revenues went up as well. The country earned $6.833 billion in November, up from $6.742 billion in October, and $6.619 billion in September. Iraq’s exports recovered, because the industry saw no significant attacks, service or weather problems as it did in previous months. Oil prices have also stayed over $100 per barrel for most of the year because of the Arab Spring, and the unrest in Syria and Libya. Even the recent bombings in Baghdad scared oil markets, keeping prices high.
All of November’s numbers were within range of the yearly averages. For the first eleven months of 2011, the country has averaged 2.16 million barrels a day, up from 1.89 million in 2010. Prices have also averaged $104.85, compared to only $75.62 last year. Finally, Iraq has far surpassed its profits from last year. In 2010, it averaged $4.352 billion in earnings a month, compared to $6.893 billion, and earned a total of $52.227 billion for the entire year. Iraq surpassed that amount by August of this year. So far, it has made $75.832 billion, and is on the way to earning approximately $82.5 billion total for 2011.
Category
2010
2011
Avg. Exports
1.89 mil/bar/day
2.16 mil/bar/day
Avg. Price
$75.62 per bar
$104.85 per bar
Avg. Mo. Profits
$4.352 bil
$6.893 bil
Total Profits
$52.227 bil
$75.832 bil
The increases in the oil industry have been the result of foreign companies returning to Iraq, but are limited because of Iraq’s facilities. In 2009, the Oil Ministry held two rounds of auctions that opened up some of the largest petroleum fields in the country to outside investment. Deputy Premier Hussein Shahristani who is in charge of energy policy recently said that he was hoping that oil production would reach 3.4 million barrels a day by the end of 2012 as a result, and exports would hit 2.6 million. The International Energy Agency recently released a report, which estimated that Iraq had the potential to add 1.87 million barrels of production each year from 2010-2016. That would only be possible if the major infrastructure projects that the government has on line can be completed. Most importantly is the completion of three new mooring ports in Basra, along with new and refurbished pipelines. The first of those is scheduled to be finished by January, but Iraq has a bad record with meeting deadlines. Even one starting operation would boost capacity by 900,000 barrels a day from Basra, which carries the majority of the nation’s oil flow. It’s therefore critical that these plans be concluded.
Not everything is going well with the foreign companies however. The New York Times recently reported that Exxon Mobile and Shell have not been paid for their work on West Qurna 1 field. They are owed an estimated $50 million, for two years worth of work. A Shell official said that the cause was red tape, which was being worked out. Other companies are being paid, but are owed large sums as well. British Petroleum (BP) and the Chinese National Petroleum Company (CNPC) that jointly operate the Rumaila field in Basra have gotten three payments each in oil, starting in May 2011, but are still owed more than $1 billion. While no corporation is going to walk away from Iraq because of this issue, it could complicate their relationship, and make the firms demand better terms from the government since the current situation is having such difficulties. The companies signed technical service agreements with the Oil Ministry, which offers very limited profits, and favors the government. The firms agreed to these conditions, because of Iraq’s huge potential, which was largely untapped for decades because of wars and international sanctions.
While 2011 has seen an across the board growth in Iraq’s oil industry, the old infrastructure has hampered further expansion. It has hit a plateau this year, just as it did last year. Fortunately for Iraq, the unrest in the region has kept prices high. Still, it needs billions of dollars of investment in drilling, pipelines, ports, storage facilities, etc. to fully reach its dreams to become a major player in the world petroleum market. The problem is the government’s lack of capacity in dealing with such large projects, which has hampered every other development deal in the country. That same bureaucracy is also delaying payments to foreign companies. If those issues aren’t addressed, Iraq may never reach its promise.
http://bit.ly/s2hdqP
Full numbers for Iraq’s November 2011 oil exports and profits were finally released, and showed a rebound on all counts after a two month dip. The price for Iraqi crude went up along with exports, leading to a rise in revenue for Iraq last montn. Despite this, Iraq’s production has still hit a plateau due to infrastructure limitations, and the country is having problems paying foreign companies that are responsible for the increases.
As reported before, Iraq’s oil exports rebounded in November after going down for the previous two months. In November, the country shipped an average of 2.13 million barrels a day, compared to 2.08 million in October, and 2.10 million in September. Last month’s average was not as high as August however, when Iraq exported 2.19 million barrels. The price of one barrel of Iraqi crude also increased from $104.43 in October to $106.59 in November.
That was the highest price since July when Iraq was selling its petroleum for $108.80 per barrel. As a result of those two factors, revenues went up as well. The country earned $6.833 billion in November, up from $6.742 billion in October, and $6.619 billion in September. Iraq’s exports recovered, because the industry saw no significant attacks, service or weather problems as it did in previous months. Oil prices have also stayed over $100 per barrel for most of the year because of the Arab Spring, and the unrest in Syria and Libya. Even the recent bombings in Baghdad scared oil markets, keeping prices high.
All of November’s numbers were within range of the yearly averages. For the first eleven months of 2011, the country has averaged 2.16 million barrels a day, up from 1.89 million in 2010. Prices have also averaged $104.85, compared to only $75.62 last year. Finally, Iraq has far surpassed its profits from last year. In 2010, it averaged $4.352 billion in earnings a month, compared to $6.893 billion, and earned a total of $52.227 billion for the entire year. Iraq surpassed that amount by August of this year. So far, it has made $75.832 billion, and is on the way to earning approximately $82.5 billion total for 2011.
Category
2010
2011
Avg. Exports
1.89 mil/bar/day
2.16 mil/bar/day
Avg. Price
$75.62 per bar
$104.85 per bar
Avg. Mo. Profits
$4.352 bil
$6.893 bil
Total Profits
$52.227 bil
$75.832 bil
The increases in the oil industry have been the result of foreign companies returning to Iraq, but are limited because of Iraq’s facilities. In 2009, the Oil Ministry held two rounds of auctions that opened up some of the largest petroleum fields in the country to outside investment. Deputy Premier Hussein Shahristani who is in charge of energy policy recently said that he was hoping that oil production would reach 3.4 million barrels a day by the end of 2012 as a result, and exports would hit 2.6 million. The International Energy Agency recently released a report, which estimated that Iraq had the potential to add 1.87 million barrels of production each year from 2010-2016. That would only be possible if the major infrastructure projects that the government has on line can be completed. Most importantly is the completion of three new mooring ports in Basra, along with new and refurbished pipelines. The first of those is scheduled to be finished by January, but Iraq has a bad record with meeting deadlines. Even one starting operation would boost capacity by 900,000 barrels a day from Basra, which carries the majority of the nation’s oil flow. It’s therefore critical that these plans be concluded.
Not everything is going well with the foreign companies however. The New York Times recently reported that Exxon Mobile and Shell have not been paid for their work on West Qurna 1 field. They are owed an estimated $50 million, for two years worth of work. A Shell official said that the cause was red tape, which was being worked out. Other companies are being paid, but are owed large sums as well. British Petroleum (BP) and the Chinese National Petroleum Company (CNPC) that jointly operate the Rumaila field in Basra have gotten three payments each in oil, starting in May 2011, but are still owed more than $1 billion. While no corporation is going to walk away from Iraq because of this issue, it could complicate their relationship, and make the firms demand better terms from the government since the current situation is having such difficulties. The companies signed technical service agreements with the Oil Ministry, which offers very limited profits, and favors the government. The firms agreed to these conditions, because of Iraq’s huge potential, which was largely untapped for decades because of wars and international sanctions.
While 2011 has seen an across the board growth in Iraq’s oil industry, the old infrastructure has hampered further expansion. It has hit a plateau this year, just as it did last year. Fortunately for Iraq, the unrest in the region has kept prices high. Still, it needs billions of dollars of investment in drilling, pipelines, ports, storage facilities, etc. to fully reach its dreams to become a major player in the world petroleum market. The problem is the government’s lack of capacity in dealing with such large projects, which has hampered every other development deal in the country. That same bureaucracy is also delaying payments to foreign companies. If those issues aren’t addressed, Iraq may never reach its promise.
http://bit.ly/s2hdqP