Iraq to Return to Big Oil Production Growth

November 20, 2013

Iraq's oil industry is poised for a second year of only modest growth in 2014, starting off slowly as extensive work at a major port curbs exports and red tape and violence prompt some oil firms to delay projects, Reuters reported on November 19.

Russia's Gazprom Neft on November 19 postponed the start of production at the Badra oilfield to next year, citing delays by Iraq in approving tenders, customs clearance, failures by contractors to deliver work on time and concerns over security of employees and property.

So far in November, Iraq has exported 2.1 million bpd from its southern terminals and about 300,000 bpd of Kirkuk crude from the north, according to shipping data and industry sources. That is up 150,000 bpd from October.

But that growth is likely to slow through the first quarter of 2014 as port work caps exports from the southern oilfields at 2.3 million bpd - a decades-high rate reached in August.

"Given these lasting export constraints, it will be next to impossible to grow production (in the near term)," said a senior Western oil executive who declined to be identified.

"There is certainly no short-term upside in export infrastructure," another senior oil industry source said.

Officials have said they expect a return to growth in 2014, with an increase of 500,000 bpd pushing up average production to 3.5 million bpd, allowing for exports of 2.9 million bpd.

Traders of Iraqi crude also saw little sign of much export growth in the next few months, not least because weather-related delays tend to pile up in the first quarter.

"They keep saying they expect a huge ramp-up," said one. "But I think 2014 will be like 2013, maybe a little better."

When completed by mid-2014, the port expansion in southern Iraq will provide offshore export capacity of 4 million bpd. Much of the work was completed last month.

Copyright: Reuters, 2013