Iraq Oil Exports Claw Back From a Trickle

KIRKUK, 15 August 2004 — Iraq’s vital but beleaguered oil industry clawed back from a trickling output yesterday with the resumption of northern exports, although a crucial southern pipeline remained shut for security reasons.

Militia threats against oil infrastructure led to the closure of the southern pipeline, pushing world oil prices to highs over four days this week.

Exports from the northern fields were also halted due to repeated sabotage, but the state-owned Northern Oil Company said yesterday that oil pumping to the Turkish port of Ceyhan had resumed at levels not seen for the past year.

“Pumping resumed this (Saturday) morning at 8:00 am (0400 GMT) from the oil fields in Kirkuk to Ceyhan at the rate of 600,000 to 800,000 barrels per day,” an official, who asked not to be named, told AFP.

He said the oil was being pumped both through the old pipeline that passes refineries in Beiji to the west and a new parallel pipeline that goes through the town of Al-Fatha, 120 kilometers (70 miles) west of Kirkuk.

Security was intense along the length of the northern export artery as the authorities took no chances over any new disruption to the vital foreign-exchange earner.

Five-man teams from a special force have been posted at every kilometer (about 1,000 yards) of the pipeline and regular patrols are being run on the road between Kirkuk and Beiji where most of the attacks have taken place.

Limited exports from the north had resumed in late June after a 10-month break, but were halted twice after attacks in mid-July and early August.

Despite a tentative ceasefire in Najaf, clashes flared further north in Hilla overnight and on yesterday the Southern Oil Company (SOC) announced the pipeline had been closed for security reasons.

“The production has been stopped since the start of the crisis and now we have stopped pumping too through the pipeline,” a spokesman said, providing no further details.

The company halted production on Monday. Since then crude exports from Basra’s two main offshore terminals, the only outlet for Iraqi oil, were slashed by half, costing the government at least $30 million a day in lost revenue.

In the light of the security situation in Iraq “and in solidarity with the people of Najaf, we have decided to halt production and pumping except for amounts needed to maintain essential services,” an SOC official said yesterday.

Following Monday’s decision to halt production, the SOC had maintained exports from stocks at an average rate of 900,000 barrels per day.

If that was still the case yesterday, then coupled with output from the north, Iraq could once again be back to its average of 1.7 million barrels per day.

Repeated sabotage on both southern and north pipelines have held Iraq back from increasing its exports and bringing in much needed hard currency for reconstruction.

Events in Iraq coupled with production fears in Russia and Venezuela pushed Brent North Sea crude for September to $42 for the first time in London trading on Friday.

In late Friday New York trade, light sweet crude for delivery in September leapt to $46.58 a barrel, after spiking earlier in the day at another all-time high of $46.65.