Iraq’s oil exports are back in the spotlight with shipments so far in January suggesting that exports from the southern ports have dropped—a sign that Iraq might be fulfilling its production cut obligations after all.
According to shipping data tracked by Reuters, Iraq’s crude oil exports from its southern ports have averaged 3.25 million bpd between 1 January and 16 January, compared to the record-high 3.51 million bpd in exports for December 2016.
“Exports are definitely down, despite what the loading schedule suggests,” Reuters quoted an industry source monitoring Iraq’s shipments as saying.
Recent loading schedules viewed and reported by various media have indicated that Iraq would be boosting January and February exports despite the OPEC cuts.
There is no strict correlation between production and exports, but reports of lower January exports from the south could lend further credence to official Iraqi statements that Iraq is following through with its pledges.
After having pleaded exemption from the supply-cut deal and disputed secondary-sources figures as a baseline for production levels, Iraq conceded and committed to cut 210,000 bpd to 4.351 million bpd as part of the OPEC deal.
However, unlike Saudi Arabia, which is in full control of its oil production, Iraq – OPEC’s no.2 producer – has contractual commitments that it has made with international oil companies that operate its massive southern oil fields. Under these commitments, the Iraqi government must compensate the oil companies when production is curtailed for reasons that are beyond the control of the driller.
To further complicate Iraq’s compliance to the deal is the Kurdistan Regional Government (KRG), which controls fields in the north. The Kurds may or may not join the cuts.
So far, Iraqi officials have said that the country had reduced production by 160,000 bpd, but there are no details on where these production cuts have been made.
By Tsvetana Paraskova for Oilprice.com