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Iraq Boosts Oil Output In Face Of Security Problems
4/8/2015
Defying the odds, Iraq has managed to increase its oil exports to the highest level in more than 35 years. The war-torn country is dealing with an array of challenges that have threatened to derail the resurgence of its oil industry. The Islamic State has ripped apart the midsection of the country since its initial onslaught in June 2014. The militant group has seized oil fields, refineries, and attacked oil infrastructure. The violence has scared away international oil personnel and investment. While ISIS burst onto the scene only recently, the fraught relationship between Baghdad and the semi-autonomous region of Kurdistan has bedeviled the country’s ability to revive its oil industry after years of war. A political impasse kept Iraq in a state of limbo. But while Iraq’s problems are deep, its potential is just as vast. Iraq has 144 billion barrels of oil reserves, the fifth largest in the world. Even that prodigious figure understates Iraq’s importance to oil markets. Iraq is one of the few countries in the world that has a massive level of latent oil potential. With ample reserves at low production costs, there are few other places on the planet that could theoretically ratchet up their oil production to the extent that Iraq could, assuming it can overcome its challenges.
In a special 2012 report on Iraq’s energy sector, the International Energy Agency predicted that Iraq would double its output to 6.1 million barrels per day (bpd) by 2020, and nearly triple it to 8.3 million bpd by 2035. But since then, the IEA’s tone in regards to Iraq has changed from bullish to one of great concern. The IEA’s Chief Economist Fatih Birol has repeatedly voiced his fears that the Middle East generally, and Iraq in particular, are in danger of falling far short of what the markets are expecting. Iraq is expected to account for half of the growth in supply from the Middle East over the next decade, but due to security concerns, may not live up to those expectations. With that future production already baked into global supply projections and thus the price of oil, the consequences of Iraq disappointing could be huge.
With that said, Iraq is making strides that were all but unimaginable last year at the height of the Islamic State’s expansion.
In March, Iraq’s oil exports reach 2.98 million bpd on average, a jump of nearly 400,000 bpd over February’s numbers. For 2014, Iraq produced 3.3 million bpd on average, the highest level since 1979.
Could this be the reason for Saudi Arabia's stance on oil supplies?
There's an incredible energy development we've been keeping track of for you over the past year... It's the reason Saudi Arabia is acting in desperation... depressing oil prices... and even risking internal unrest. Their (and OPEC’s) very survival is being threatened.
And we believe we’ve put together an incredible video revealing how it works.
View the video here...
March’s total included 268,000 bpd from the Kurdish pipeline to Turkey. A political deal struck between Baghdad and Kurdistan has improved political stability and allowed more exports to the north. With a Kurdish push for independence on hold for now, and a fragile oil deal improving cooperation between Erbil and Baghdad, a flood of new investment could eventually come to Iraq if the security situation can improve.
Still, massive obstacles remain. Iraq has been burned by the collapse in oil prices. Despite ramping up production and exports, Iraq earned just $4.4 billion in revenues from oil, half of what it earned in May 2014 despite lower levels of output. The sharp drop in revenues has caused the Iraqi government to lapse on its payments to private oil companies as its coffers have been emptied out. It now owes around $18 billion to international oil companies for work they have done this year, which comes on top of an additional $8 billion owed for 2014.
Related: Oil Rebound May Come Sooner Than Expected
But the Iraqi government wants to focus on the things that are within its control. That includes a push to revise contracts with international oil companies. Baghdad wants to change the contracts to provide a greater upside to companies when oil prices go up, but also reduce the risk to the government’s take when oil prices drop. Once seen as a coup by the Iraqi government because of the seemingly tough terms it imposed on oil majors when oil prices are high, the contracts – which involve fixed fees – are much less lucrative when oil prices tank.
Similarly, the other major front on which the government can make progress is with internal security. Iraqi forces backed by the U.S. and Iran, recently retook Tikrit after 10 months in IS control. Tikrit, like much of Iraq, has been devastated by violence, but if IS can be rolled back, Iraq can continue its progress on reviving its oil sector. SOURCE
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Turkish President Seeks Closer Ties with Iran
Turkey's president sought deeper economic ties and common ground on Middle East conflicts during a visit to Iran on Tuesday, even as the longtime rivals compete to influence the outcome of wars in Yemen, Syria and Iraq. Recep Tayyip Erdogan's meeting with Iranian President Hasan Rouhani, on the heels of Tehran's framework nuclear agreement with six world powers, marks Turkey's push to reap a trade windfall if a final deal is reached that would lift sanctions on Iran. It was an indication of how the prospect of an end to Iran's isolation is already starting to recalibrate regional balances, spooking rivals led by Saudi Arabia and enemies such as Israel, while beckoning businesses from China to the West.
The two leaders tried to play down their foreign-policy differences at a news conference where no questions were allowed. They stressed their determination to fight terrorism, pledged to boost trade, and unveiled agreements to bolster cooperation in areas ranging from health care to the environment and small business.
Mr. Rouhani said the neighboring countries were on the same page about ending the war in Yemen, where Turkey supports a Saudi-led Sunni coalition against Iran-backed Shiite Houthi rebels. Mr. Erdogan also tried to sidestep sectarian tensions between the countries, pressing for an end to conflicts in Iraq and Syria.
"The region is practically a ring of fire," Mr. Erdogan said. "I am not concerned about Shiite nor Sunnis... . Many people are dying. It's impossible to accept this. Therefore we must come together, sit, talk, negotiate the matter and put an end to this bloodshed, these deaths."
The comments by the two presidents hark back to joint calls by Iran and Turkey for peace efforts since the 2011 outbreak of the Syrian conflict. With Turkey seeking to oust Iranian-backed President Bashar al-Assad, their joint promises to push for peace never materialized.
But regional competition didn't deter Mr. Erdogan's push to capitalize on years of diplomatic and economic support for Iran when it came to international pressure over its nuclear program -- a rare bright spot in the relationship.
The Turkish president pledged to buy significantly more natural gas from Iran if it lowers the price -- a long- standing dispute that is the subject of a continuing arbitration. He also called for the counties to start trading in their local currencies to avoid being pressured by the dollar and the euro.
Ankara's past efforts to shield Iran from sanctions strained Turkey's ties with its North Atlantic Treaty Organization allies and threatened to isolate the country as uprisings destabilized the Middle East. Now, Turkey's government is pushing to triple bilateral trade with its eighth-largest trading partner to $35 billion by 2016, and to secure energy deals and boost exports.
"Turkey is the most prepared country for Iran to be free of sanctions, for Iran's economy to normalize," Turkish Economy Minister Nihat Zeybekci said Monday.
But the tensions that impede closer ties were on display just before the second meeting of the Turkey-Iran High Level Cooperation Council. The gathering was almost derailed after Mr. Erdogan accused Iran of waging proxy wars in the Middle East and threw Turkey's weight behind the Saudi-led military operations in Yemen.
Turkey's Sunni president also said Iran is backing Shiite militias in Iraq and Syria against Islamic State with the aim of filling the vacuum with groups loyal to Tehran.
"Iran is simply trying to dominate the region," Mr. Erdogan said late last month, calling on Tehran to end military campaigns in Yemen, Iraq and Syria. "This has started to bother a lot of countries in the region, including us, Saudi Arabia and the Gulf nations."
Following the Turkish leader's comments, some Iranian lawmakers called on their president to cancel Tuesday's summit, and 65 parliamentarians sent a letter to Mr. Rouhani demanding an apology from Mr. Erdogan.
Yet the Turkish leader didn't backtrack during the joint news conference with Mr. Rouhani.
On Monday, Mr. Erdogan met with Saudi Deputy Crown Prince Mohammed bin Nayef -- credited with building the kingdom's counterterrorism efforts. The surprise visit just before Mr. Erdogan's Tehran trip was seen as a confirmation of the Turkish-Saudi alliance against Iran in Yemen and the region.
Turkish-Iranian relations have become more complicated since the Arab Spring uprisings began four years ago. Before that, Ankara voted against a United Nations Security Council resolution for additional sanctions on Iran despite strong NATO criticism.
In the following years, Turkey boosted gold exports to Iran to pay for oil and gas imports -- a move that helped Tehran skirt sanctions
[You must be registered and logged in to see this link.]
4/8/2015
Defying the odds, Iraq has managed to increase its oil exports to the highest level in more than 35 years. The war-torn country is dealing with an array of challenges that have threatened to derail the resurgence of its oil industry. The Islamic State has ripped apart the midsection of the country since its initial onslaught in June 2014. The militant group has seized oil fields, refineries, and attacked oil infrastructure. The violence has scared away international oil personnel and investment. While ISIS burst onto the scene only recently, the fraught relationship between Baghdad and the semi-autonomous region of Kurdistan has bedeviled the country’s ability to revive its oil industry after years of war. A political impasse kept Iraq in a state of limbo. But while Iraq’s problems are deep, its potential is just as vast. Iraq has 144 billion barrels of oil reserves, the fifth largest in the world. Even that prodigious figure understates Iraq’s importance to oil markets. Iraq is one of the few countries in the world that has a massive level of latent oil potential. With ample reserves at low production costs, there are few other places on the planet that could theoretically ratchet up their oil production to the extent that Iraq could, assuming it can overcome its challenges.
In a special 2012 report on Iraq’s energy sector, the International Energy Agency predicted that Iraq would double its output to 6.1 million barrels per day (bpd) by 2020, and nearly triple it to 8.3 million bpd by 2035. But since then, the IEA’s tone in regards to Iraq has changed from bullish to one of great concern. The IEA’s Chief Economist Fatih Birol has repeatedly voiced his fears that the Middle East generally, and Iraq in particular, are in danger of falling far short of what the markets are expecting. Iraq is expected to account for half of the growth in supply from the Middle East over the next decade, but due to security concerns, may not live up to those expectations. With that future production already baked into global supply projections and thus the price of oil, the consequences of Iraq disappointing could be huge.
With that said, Iraq is making strides that were all but unimaginable last year at the height of the Islamic State’s expansion.
In March, Iraq’s oil exports reach 2.98 million bpd on average, a jump of nearly 400,000 bpd over February’s numbers. For 2014, Iraq produced 3.3 million bpd on average, the highest level since 1979.
Could this be the reason for Saudi Arabia's stance on oil supplies?
There's an incredible energy development we've been keeping track of for you over the past year... It's the reason Saudi Arabia is acting in desperation... depressing oil prices... and even risking internal unrest. Their (and OPEC’s) very survival is being threatened.
And we believe we’ve put together an incredible video revealing how it works.
View the video here...
March’s total included 268,000 bpd from the Kurdish pipeline to Turkey. A political deal struck between Baghdad and Kurdistan has improved political stability and allowed more exports to the north. With a Kurdish push for independence on hold for now, and a fragile oil deal improving cooperation between Erbil and Baghdad, a flood of new investment could eventually come to Iraq if the security situation can improve.
Still, massive obstacles remain. Iraq has been burned by the collapse in oil prices. Despite ramping up production and exports, Iraq earned just $4.4 billion in revenues from oil, half of what it earned in May 2014 despite lower levels of output. The sharp drop in revenues has caused the Iraqi government to lapse on its payments to private oil companies as its coffers have been emptied out. It now owes around $18 billion to international oil companies for work they have done this year, which comes on top of an additional $8 billion owed for 2014.
Related: Oil Rebound May Come Sooner Than Expected
But the Iraqi government wants to focus on the things that are within its control. That includes a push to revise contracts with international oil companies. Baghdad wants to change the contracts to provide a greater upside to companies when oil prices go up, but also reduce the risk to the government’s take when oil prices drop. Once seen as a coup by the Iraqi government because of the seemingly tough terms it imposed on oil majors when oil prices are high, the contracts – which involve fixed fees – are much less lucrative when oil prices tank.
Similarly, the other major front on which the government can make progress is with internal security. Iraqi forces backed by the U.S. and Iran, recently retook Tikrit after 10 months in IS control. Tikrit, like much of Iraq, has been devastated by violence, but if IS can be rolled back, Iraq can continue its progress on reviving its oil sector. SOURCE
[You must be registered and logged in to see this link.]
Turkish President Seeks Closer Ties with Iran
Turkey's president sought deeper economic ties and common ground on Middle East conflicts during a visit to Iran on Tuesday, even as the longtime rivals compete to influence the outcome of wars in Yemen, Syria and Iraq. Recep Tayyip Erdogan's meeting with Iranian President Hasan Rouhani, on the heels of Tehran's framework nuclear agreement with six world powers, marks Turkey's push to reap a trade windfall if a final deal is reached that would lift sanctions on Iran. It was an indication of how the prospect of an end to Iran's isolation is already starting to recalibrate regional balances, spooking rivals led by Saudi Arabia and enemies such as Israel, while beckoning businesses from China to the West.
The two leaders tried to play down their foreign-policy differences at a news conference where no questions were allowed. They stressed their determination to fight terrorism, pledged to boost trade, and unveiled agreements to bolster cooperation in areas ranging from health care to the environment and small business.
Mr. Rouhani said the neighboring countries were on the same page about ending the war in Yemen, where Turkey supports a Saudi-led Sunni coalition against Iran-backed Shiite Houthi rebels. Mr. Erdogan also tried to sidestep sectarian tensions between the countries, pressing for an end to conflicts in Iraq and Syria.
"The region is practically a ring of fire," Mr. Erdogan said. "I am not concerned about Shiite nor Sunnis... . Many people are dying. It's impossible to accept this. Therefore we must come together, sit, talk, negotiate the matter and put an end to this bloodshed, these deaths."
The comments by the two presidents hark back to joint calls by Iran and Turkey for peace efforts since the 2011 outbreak of the Syrian conflict. With Turkey seeking to oust Iranian-backed President Bashar al-Assad, their joint promises to push for peace never materialized.
But regional competition didn't deter Mr. Erdogan's push to capitalize on years of diplomatic and economic support for Iran when it came to international pressure over its nuclear program -- a rare bright spot in the relationship.
The Turkish president pledged to buy significantly more natural gas from Iran if it lowers the price -- a long- standing dispute that is the subject of a continuing arbitration. He also called for the counties to start trading in their local currencies to avoid being pressured by the dollar and the euro.
Ankara's past efforts to shield Iran from sanctions strained Turkey's ties with its North Atlantic Treaty Organization allies and threatened to isolate the country as uprisings destabilized the Middle East. Now, Turkey's government is pushing to triple bilateral trade with its eighth-largest trading partner to $35 billion by 2016, and to secure energy deals and boost exports.
"Turkey is the most prepared country for Iran to be free of sanctions, for Iran's economy to normalize," Turkish Economy Minister Nihat Zeybekci said Monday.
But the tensions that impede closer ties were on display just before the second meeting of the Turkey-Iran High Level Cooperation Council. The gathering was almost derailed after Mr. Erdogan accused Iran of waging proxy wars in the Middle East and threw Turkey's weight behind the Saudi-led military operations in Yemen.
Turkey's Sunni president also said Iran is backing Shiite militias in Iraq and Syria against Islamic State with the aim of filling the vacuum with groups loyal to Tehran.
"Iran is simply trying to dominate the region," Mr. Erdogan said late last month, calling on Tehran to end military campaigns in Yemen, Iraq and Syria. "This has started to bother a lot of countries in the region, including us, Saudi Arabia and the Gulf nations."
Following the Turkish leader's comments, some Iranian lawmakers called on their president to cancel Tuesday's summit, and 65 parliamentarians sent a letter to Mr. Rouhani demanding an apology from Mr. Erdogan.
Yet the Turkish leader didn't backtrack during the joint news conference with Mr. Rouhani.
On Monday, Mr. Erdogan met with Saudi Deputy Crown Prince Mohammed bin Nayef -- credited with building the kingdom's counterterrorism efforts. The surprise visit just before Mr. Erdogan's Tehran trip was seen as a confirmation of the Turkish-Saudi alliance against Iran in Yemen and the region.
Turkish-Iranian relations have become more complicated since the Arab Spring uprisings began four years ago. Before that, Ankara voted against a United Nations Security Council resolution for additional sanctions on Iran despite strong NATO criticism.
In the following years, Turkey boosted gold exports to Iran to pay for oil and gas imports -- a move that helped Tehran skirt sanctions
[You must be registered and logged in to see this link.]
