Iraq is set to experience delays to it’s plan to boost oil export capacity at a time when oil prices are skyrocketing all over the world.
Image Credit: Erik Mclean on Unsplash
By Reuters, Team MEB
Iraq’s bid to boost oil export capacity at its Gulf ports has suffered a setback due to delays in pumping station upgrades, an Iraqi oil source said.
OPEC’s second-largest oil producer aims to raise operational export capacity in Basra to 3.45 million barrels per day (bpd) from 3.3 million bpd.
The delay means it could miss out on exporting an additional 150,000 bpd of oil exports for the third quarter.
While this is a relatively small level, the setback comes at a time of tight global oil supply, limited spare capacity from other OPEC+ producers, and little room to compensate for a major supply outage.
The delay to its original plan stems from a lag in obtaining necessary approvals and in finalising tenders for the upgrade work, an Iraqi oil representative said.
The Iraqi oil ministry did not respond to a request for comment.
State-owned Basra Oil Co (BOC) had planned to install new pumping stations at Iraq’s Gulf ports to reach export capacity of 3.45 million bpd in the second quarter.
BOC now expects to increase southern export capacity to 3.35 million bpd in August and reach 3.45 million bpd by September.
“I’m not sure if BOC can meet this deadline due to the delay in the [pumping stations] project,” the source said, highlighting that without the upgrade work Iraq’s exports could remain around 3.3 million bpd.
Iraq’s crude exports from Basra averaged 3.27 million bpd in June, and 3.24 million bpd in the second quarter, according to Iraq’s State Oil Marketing Organisation (SOMO).
Limited export capacity may strain Iraq’s ability to ramp up production at pace, as the country has few storage options.
Government figures show the country’s crude output has risen largely in line with its quota under the OPEC+ agreement among oil producing countries.
But its stocks have also increased every month this year, according to Reuters calculations based on SOMO data.
Secondary sources, which the OPEC secretariat uses to calculate compliance, placed Iraqi production at an average of 34,000 bpd below its quota in the second quarter and 75,000 bpd below its ceiling in June.
SOMO had exported as much as 3.7 million bpd from its southern ports in Basra, but aging export infrastructure forced Iraq to reduce southern exports and carry out upgrade work for most of 2021.
