Iraq’s Oil Picture Gets More Confused
|June 20, 2014||Filled under Iraq's Oil|
Iraq’s Oil News –
As of this writing, the political situation in Iraq continues to be uncertain, but my guess is that there will be a lot of street-level fighting in the areas north of Baghdad, and the southern oil provinces will be largely unaffected, unless a suicide team manages an attack on Iraq’s oil infrastructure (possible but not likely).
The Ceyhan pipeline is likely to be disrupted, costing about 250 thousand barrels a day, for some time. Question is whether the Kurds fight for it or cut a deal. If the latter, dissolution of Iraq is one medium step closer, with ISIS (or ISIL or whatever you prefer) gets regular income and a little legitimacy, and Kurdistan’s government gets more independence.
At the same time, improvements to facilities could see southern Iraq’s oil exports grow by enough to offset the lost northern sales, which means more funds at the disposal of the government, or at least some officials. This should help maintain global market balances and probably keep prices from rising much.
Longer term, it seems increasingly likely that the conflict will mean more oil in the next few years; to paraphrase Samuel Johnson, nothing concentrates the mind more than a few thousand well-armed religious fanatics descending on you. One would hope that Baghdad politicians will learn to make decisions in a reasonable time period, and compromise with other parties and sectors. That should mean that investment in southern oil fields is expedited, which should impact production in 2-3 years.
Additionally, some deal with Kurdistan that will encourage them to export oil, perhaps through their own dedicated pipeline, should mean the same. Although Kurdistan is not as well endowed with oil as southern Iraq (and not many countries are), they could easily hit 2 mb/ in perhaps five years, even if they don’t retain Kirkuk, the supergiant oil field now under their “protection”.
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