Iraq maintained near-record export levels in July due to rising output from Basra, which helped offset disruptions to northern oil sales caused by political disputes and pipeline outages.

The State Oil Marketing Organization (SOMO) reported an average 3.105 million barrels per day (bpd) of exports in July (a total of 96.245 million barrels), which is down from 3.187 million bpd in June and 3.145 million bpd in May, though more than in April.

Almost all of those exports flowed through Basra, which set an all-time export record of 3.064 million bpd, up from 3.022 million bpd in June and 2.694 million bpd in May. The increase came mainly because SOMO began marketing its new Basra Heavy grade of crude, which allowed the Oil Ministry to raise export production from fields with heavier oil while protecting the quality of its primary Basra Light grade.

Basra Heavy sales rose to about 827,000 bpd, according to tanker loading data obtained by Iraq Oil Report – up from 592,000 bpd in June, its inaugural month on the market. Nearly all of the Basra Heavy was lifted by companies as in-kind payment for work performed under technical service contracts to develop fields in southern Iraq.

Basra Heavy crude averaged 23.62 API in July, a very slight decrease from June. (A higher API rating indicates lighter crude, which generally commands a higher price.) Basra Light loaded at the single point mooring (SPM) buoys averaged 30.84 API while Basra Light loaded at the al-Basra and Khor al-Amaya terminals averaged 28.09 API – a disparity which has decreased since June.

Rising production from Basra is making up for a sharp decrease in federal oil exports via Turkey. In previous months, the autonomous Kurdistan Regional Government (KRG) had used its independent pipeline to facilitate as much as 450,000 bpd of federal exports – but in July those transfers fell to just 41,000 bpd, according to the Oil Ministry.

Instead, the KRG directed most of the oil flowing through its pipeline to be sold independently, exporting roughly 420,000 bpd in July, according to an estimate compiled by Iraq Oil Report based on tanker loading data obtained from Ceyhan and public tanker tracking data. The KRG Ministry of Natural Resources (MNR) is expected to release its official July export data within days, and has acknowledged allocating increasing volumes for autonomous sales.

“Due to a number of factors, the federal government has to date been unable to provide the Kurdistan Region with its monthly budgetary dues,” the MNR said in a statement on Monday. “As a result, the KRG has been obliged to introduce direct crude oil sales from Ceyhan to help pay Kurdistan Region’s governmental salaries, maintain vital government services, and of course, pay the Peshmerga and other security forces who are fighting Islamic State terrorists.”

Under an agreement embedded in the 2015 budget law, the KRG is supposed to transfer 550,000 bpd to SOMO storage tanks at Turkey’s Ceyhan port, in exchange for a portion of federal budget spending. Neither side has fully met the terms of that agreement, however; if they had, Iraq’s federal exports would be setting new records.

“The [Oil Ministry] was hoping to reach unprecedented levels of exports for July, if the Kurdistan region had met its commitments in exporting the amount that had been agreed according to the 2015 budget, which was 550,000 bpd,” Oil Ministry spokesperson Assem Jihad said via text message.

The KRG’s independent export volumes are not reflected in the federal government’s export figures.

Both Baghdad and the KRG are suffering from severe financial crises stemming from years of budgetary mismanagement, which left them vulnerable to the twin shocks of falling oil prices and rising costs of fighting the Islamic State (IS) militant group. The fiscal squeeze has left both sides with little room to compromise in their political disputes.

The federal government earned $4.908 billion in July, a decrease from $5.447 billion in May and $5.289 billion in June. Not only did export levels dip, but the average sale price also fell from just over $55 per barrel in May and June to $50.99 in July.

Iraq’s budget is based on an expectation of selling 3.3 million bpd at $56 per barrel over the course of the year, including 2.75 million bpd through Basra and 550,000 bpd through the north. Although Basra exports have now surpassed their budget goal, Iraq continues to fall short of the overall target due to faltering cooperation with the KRG.

The KRG’s oil exports have taken a hit due to problems on the Turkish side of the Iraq-Turkey Pipeline (ITP): technical issues have caused shutdowns, smugglers have broken into the line, and saboteurs have recently targeted it with explosives. The pipeline has been offline since July 27.

Prior to the recent outage, oil had been routinely flowing at about 600,000 bpd.

A senior Oil Ministry official said late last week that SOMO had received four batches of 260,000 barrels from the KRG in July, and was expecting another 1.74 million barrels which would be sold to Tupras. It’s not clear if that transfer was made but, if so, it was apparently not done in time to be reflected in SOMO’s July data.

“All the 2 million will be sent to Tupras,” the Oil Ministry official said. “Then nothing more until the [Oil Minister is] to reach an agreement with KRG again.”

Below are Iraq’s average daily crude exports and total revenues, by month, as provided by the Iraqi Oil Ministry, since January 2011:

2015

July 2015: 3.105 million bpd – $4.908 billion
June 2015: 3.187 million bpd – $5.289 billion
May 2015: 3.145 million bpd – $5.447 billion
April 2015: 3.077 million bpd – $4.8 billion
March 2015: 2.980 million bpd – $4.457 billion
Feb. 2015: 2.597 million bpd – $3.449 billion
Jan. 2015: 2.535 million bpd – $3.258 billion

2014

2014 average daily total: 2.517 million bpd
2014 total revenue: $84.204 billion

Dec. 2014: 2.94 million bpd – $5.195 billion
Nov. 2014: 2.51 million bpd – $5.238 billion
Oct. 2014: 2.461 million bpd – $6.19 billion
Sept. 2014: 2.542 million bpd – $7 billion
Aug. 2014: 2.375 million bpd – $7.172 billion
July 2014: 2.442 million bpd – $7.8 billion
June 2014: 2.423 million bpd – $7.47 billion
May 2014: 2.58 million bpd – $8.077 billion
April 2014: 2.51 million bpd – $7.582 billion
March 2014: 2.396 million bpd – $7.507 billion
Feb. 2014: 2.799 million bpd – $7.9 billion
Jan. 2014: 2.228 million bpd – $7.073 billion

2013

2013 average daily total: 2.391 million bpd
2013 total revenue: $89.145 billion

Dec. 2013: 2.341 million bpd – $7.471 billion
Nov. 2013: 2.381 million bpd – $7.238 billion
Oct. 2013: 2.253 million bpd – $7.169 billion
Sept. 2013: 2.07 million bpd – $6.511 billion
Aug. 2013: 2.579 million bpd – $8.356 billion
July 2013: 2.324 million bpd – $7.272 billion
June 2013: 2.328 million bpd – $6.799 billion
May 2013: 2.483 million bpd – $7.477 billion
April 2013: 2.622 million bpd – $7.764 billion
March 2013: 2.417 million bpd – $7.772 billion
Feb. 2013: 2.536 million bpd – $7.644 billion
Jan. 2013: 2.358 million bpd – $7.672 billion

2012

2012 average daily total: 2.42 million bpd
2012 total revenue: $94.078 billion

Dec. 2012: 2.348 million bpd – $7.551 billion
Nov. 2012: 2.620 million bpd – $8.2 billion
Oct. 2012: 2.624 million bpd – $8.578 billion
Sept. 2012: 2.598 million bpd – $8.371 billion
Aug. 2012: 2.565 million bpd – $8.44 billion
July 2012: 2.516 million bpd – $7.5 billion
June 2012: 2.403 million bpd – $6.453 billion
May 2012: 2.452 million bpd – $8 billion
April 2012: 2.508 million bpd – $8.795 billion
March 2012: 2.316 million bpd – $8.472 billion
Feb. 2012: 2.013 million bpd – $6.595 billion
Jan. 2012: 2.106 million bpd – $7.123 billion

2011

2011 average daily total: 2.165 million bpd
2011 Total revenue: $82.97 billion

Dec. 2011: 2.15 million bpd – $7.06 billion
Nov. 2011: 2.13 million bpd – $6.83 billion
Oct. 2011: 2.09 million bpd – $6.74 billion
Sept. 2011: 2.103 million bpd – $6.62 billion
Aug. 2011: 2.189 million bpd – $7.12 billion
July 2011: 2.167 million bpd – $7.31 billion
June 2011: 2.273 million bpd – $7.17 billion
May 2011: 2.225 million bpd – $7.47 billion
April 2011: 2.141 million bpd – $7.34 billion
March 2011: 2.159 million bpd – $7.17 billion
Feb. 2011: 2.202 million bpd – $6.06 billion
Jan. 2011: 2.163 million bpd – $6.08 billion

By Ben Lando, Patrick Osgood, Kamaran al-Najar, Ali Abu Iraq and Staff of Iraq Oil Report
Published Tuesday, August 4th, 2015

Ben Lando reported from the United States. Patrick Osgood reported from Erbil. Kamaran al-Najar reported from Kirkuk. Ali Abu Iraq reported from Basra. Iraqi staff reporting from Baghdad are anonymous for their security.

Source: http://www.iraqoilreport.com/news/july-exports-dip-despite-rising-basra-output-15510/