Iraqi officials are giving mixed signals about the resumption of crude oil exports from the country's northern fields, some saying it could start in days, while others insisting that any start-up will be months away—possibly as late as August.
Before the war, Iraq's northern fields were pumping about 800,000 b/d of oil from Kirkuk along the 600 mile dual pipeline to Ceyhan, Turkey's export terminal on the Mediterranean Sea.
But all pumping stopped in March 2003 at the start of the US-led war, and it has yet to resume. The delay has been caused partly by war-inflicted damage, such as that sustained at the Al-Fatah Bridge during hostilities, but it is mostly due to continued sabotage.
Pipeline attacks
Since the end of the war last April, officials have announced a number of dates for the resumption of exports from the northern fields, only to announce further delays due to repeated acts of sabotage.
On Aug. 15, 2003, Ceyhan officials said Iraq had begun pumping fresh crude oil through the northern pipeline for the first time since the start of the war, and that it was transporting some 300,000-400,000 b/d of oil.
But on Aug. 16, two blasts on the northern pipeline system stopped the oil flow, and officials estimated that repairs would take 10-14 days. Meanwhile, they said, the shutdown would cost Iraq $7 million/day in lost oil export revenues.
The line has stayed shut since then, though officials recently expressed the hope of resuming exports by March, believing that security would improve along the pipeline system.
But that estimate has been revised again as sabotage—or at least the threat of sabotage—continues to be a problem, according to some Iraqi oil officials.
One official told Reuters that "the attacks are steady, and security is still a problem.
It's very hard to tell when it will be ready because every time we finish a repair, we fear there will be another attack."
Another official said there had been 40 attacks on the pipeline in the last 3-4 months, close to previous levels of sabotage that have hit the oil industry since the US-led invasion toppled Saddam Hussein in April.
As a result, officials said, they expect to have the pipeline running by "late summer" at the earliest. But others suggest that exports could actually start up much sooner.
Resumed exports
Manaa al-Obaydi, deputy director general of North Oil Co., said oil exports could be boosted by as much as 320,000 b/d as soon as the oil ministry gives the go-ahead. Shipments could restart within "a matter of weeks—a matter of days even," Al-Obaydi told the Associated Press.
"The closure is not a forced closure. It's not that I cannot export, [and] therefore I'm not exporting. I can export if the Ministry of Oil decides to do so," Al-Obaydi said at NOC's headquarters, 5 miles northwest of Kirkuk.
Iraqi oil ministry officials were not available for comment, but one industry source told OGJ Online that the authorities were being "supercautious" about the resumption of exports until the sabotage problem had come under much greater control.
"They have to keep in mind not just attacks but the threat of attacks, too. They could be facing even worse problems if they give in to pressure and start up the system too soon. One bomb could do months of damage," he said. "It's better to play safe for a while longer."
Playing safe does have costs of its own, however, as Iraq has been able to export crude oil only from its southern oil fields since the end of the war, with oil exports running at 1.55 million b/d—slightly under official budget estimates.
Iraq's 2004 budget assumes the country will earn $13 billion from crude exports of 1.6 million b/d. But Iraq also has contracted to sell 1.7 million b/d in February, and northern supplies could easily make up the additional required output.
According to Iraqi Oil Minister Ibrahim Bahr al-Ulum, oil production at Kirkuk "is 200,000-400,000 b/d, and it is possible to raise it to 600,000 b/d."
Indeed, according to Al-Ulum, Iraq is looking at substantial increases in production of crude oil nationwide but still remains thwarted by export bottlenecks.
"We are now producing around 2.3 million b/d [of oil] and plan to reach 2.8 million b/d in the second quarter, and will increase production to no more than 3 million b/d. However, the question is how to sustain this production level, and how to assure export facilities," Al-Ulum told Baghdad's Al-Nahdah newspaper.
Current oil production
The paper quoted him as saying that current production of Basrah Light from the major fields include Rumailah 1.3 million b/d, Zubair 130,000 b/d, West Qurna 290,000 b/d, Majnoon 50,000 b/d, and Bin Umar 10,000 b/d.
Basra Light exports currently are averaging around 1.55 million b/d, while the contracts signed by Iraq's State Oil Marketing Organization total 1.7 million b/d, Al-Ulum said, adding that buyers of Basrah exports include ChevronTexaco Corp., CEPSA SA, ENI SPA, Indian Oil Corp., Mitsubishi Corp., Sinochem, BP PLC, Koch Industries Inc., ExxonMobil Corp., Respol-YPF SA, Petróleo Brasileiro SA, Hindustan Petroleum Corp. Ltd., Royal Dutch/Shell Group, and Total SA.
Meanwhile, as a step toward ending the bottleneck and boosting Iraq's export potential, considered "vital" for its future, Iraqi oil officials are said to be discussing the development of export pipelines with neighboring countries.
Alternate routes
Al-Ulum said his ministry attaches "great importance" to the idea of alternative export routes, especially through Saudi Arabia. "We will discuss this issue with the Saudi officials in the future," he said, adding "we are confident that they are eager to support Iraq at this critical junction in building its future."
The prospect of substantially increasing Iraqi exports through a variety of alternative routes is already widely recognized.
The US Energy Information Administration says that "under optimal conditions, and including routes through both Syria and Saudi Arabia that are now closed, Iraq's oil export infrastructure could handle throughput of more than 6 million b/d [of oil]."
The EIA computes this figure as including 2.8 million b/d of oil via the Persian Gulf, 1.65 million b/d via Saudi Arabia, 1.6 million b/d via Turkey, and perhaps another 300,000 b/d via Jordan and Syria.
While such figures represent a glowing future, Iraqi officials will be happy enough for the moment if they can get an additional 600,000 b/d of oil pumped from Kirkuk to Ceyhan. For that to happen, they must wait for reasonable assurances that the threat of sabotage finally has come to an end.
