x Abu Dhabi, UAEMonday 24 July 2017

Baghdad works hard to lift oil output

Iraq's grandiose oil production targets of 12 million barrels per day (bpd) are quietly being revised, but the country is nevertheless working hard to ensure a more modest output makes it out of the country.

Iraq's ambitious oil production targets of 12 million barrels per day (bpd) are quietly being revised, but the country is nevertheless working hard to ensure a more modest amount makes it out of the country.

In February, Nouri Al Maliki, the country's prime minister, inaugurated the first of five planned single-point mooring terminals, located on the shores of Basra.

The first terminal will eventually boost Iraq's 2 million bpd export capacity by 900,000 bpd, and the five terminals combined will increase capacity by 5 million bpd at a cost of US$1.3 billion (Dh4.7bn).

Tanker exports through the Gulf are vulnerable to geopolitical tension. The latest round of sanctions on neighbouring Iran have provoked loud sabre-rattling by Tehran, and resulted in a big risk premium on the oil price over fears that the Strait of Hormuz could be shut down by the Iranians.

The tension has prompted the Iraqi government to focus on its pipeline options.

While about 1.7 million bpd of Iraq's exports are being shipped out, plans are now afoot to resurrect a pipeline that connects the southern oil fields with the northern export terminal in Kirkuk, where oil produced in the north is exported to Turkey via the Kirkuk-Ceyhan pipeline.

"The way you can market crude from Ceyhan is very different to the way you can market it from Basra. If you had that sort of flexibility it would be very good for their global oil market," said Samuel Ciszuk, an analyst KBC Energy Economics.

Whereas the Iranian threat is hypothetical, disruptions to the Kirkuk-Ceyhan route are very real.

The pipeline has been attacked three times in the Sirnak region recently in south-east Turkey. The pipeline had previously been under attack by the separatist Kurdistan Workers' Party (PKK), but other radical groups are being blamed for the most recent incidents.

* Florian Neuhof