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Page added on March 14, 2014
OPEC Production Surges as Iraq Pumps Most in 35 Years
OPEC crude production rose above its target for the first time in five months as Iraq pumped the most in 35 years, according to the International Energy Agency.
The 12 members of the Organization of Petroleum Exporting Countries produced 30.49 million barrels a day in February, up from 29.99 million in January, the Paris-based IEA said today in its monthly oil market report. That’s about 300,000 barrels a day higher than the average level required in the second half of the year, according to the agency.
Iraqi crude output jumped by 530,000 barrels a day to 3.62 million, driven by upgraded infrastructure in the country’s southern oil-producing region and the reduction of bottlenecks at its Gulf export facilities. That was the highest since 1979. Exports soared by 572,000 barrels a day to 2.8 million.
“The exceptional increase in February’s exports has been an unexpected boost for the country, which has struggled to meet production targets,” the IEA said. “Increased export capacity and the start-up of new production in the south holds the promise of higher output this year.”
OPEC, which supplies about 40 percent of the world’s oil, estimated that its members produced about 30.12 million barrels a day last month, as Iraq compensated for reductions in Libya and Saudi Arabia, according to a report by the group yesterday based on secondary sources. Output was the most since August.
Saudi Production
Saudi Arabia raised production to 9.85 million barrels a day in February versus 9.76 million in the previous month, the IEA said, reflecting increased demand from the nation’s new 400,000 barrel-a-day Jubail refinery.
Libya pumped an average 360,000 barrels a day last month versus 500,000 barrels a day in January.
“Unrest and protests by separatist militias seeking a greater share of the country’s oil wealth and disgruntled ethnic groups have held hostage the country’s eastern production for eight months against a backdrop of a weak and battered central government,” the IEA said. “The latest developments put in further doubt a recovery in Libya’s oil production near-term.”
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. The group, which has a collective target of 30 million barrels, will next meet to review the limit on June 11 at its headquarters in Vienna.
20 Comments on "OPEC Production Surges as Iraq Pumps Most in 35 Years"
Davy, Hermann, MO on Fri, 14th Mar 2014 12:09 pm
I am wondering why the “lobby of plenty and human exceptionalsim” fan Bloomberg did not mention Algeria, Angola, Ecuador, Iran, Ecuador, Libya, Nigeria, Qatar, and Venezuela are in steep decline? Maybe the editors overlooked that.
HelicopterTed on Fri, 14th Mar 2014 12:44 pm
Seems like the IEA seriously dropped the ball here – how can they underestimate Iraqi supplies by a quarter, with no warning whatsoever
shortonoil on Fri, 14th Mar 2014 1:27 pm
These production numbers are primarily self reported by the producing countries. What nation would jeopardize their sovereign debt ratings by reporting anything but increasing crude production? Anything but good news affects their bond rates, and ability to raise foreign capital. Reports of declining production would likely weaken, and could destabilize the regimes that are now in power.
These are the same nations that have been falsifying their reserve estimates for decades. But we are now supposed to believe they are telling telling us the truth when their very existence may depend on them not! Even our own EIA has been inflating US production numbers by reporting field condensate production (pentane) which has exploded with shale production as crude. Accepting these numbers at face value is on the far side of naive.
At this point we are relying almost entirely on our models. The EIA and IEA are consistently reporting numbers that are up, up, up. Our models indicate that the situation is down, down, down. There is far too much political, and economic capital at stake to believe that a little bending of the truth is not taking place.
http://www.thehillsgroup.org/
westexas on Fri, 14th Mar 2014 1:44 pm
On an annual basis, self reported OPEC 12 crude oil production (crude only, not C+C) has been flat to down since they hit 31 mbpd in 2005.
If we look at crude only, which is generally defined as 45 or less API gravity oil, I suspect that virtually 100% of the increase in global liquids production since 2005 has been from byproducts of natural gas production (condensate & NGL’s) and from biofuels.
Makati1 on Fri, 14th Mar 2014 2:44 pm
Ask anyone employed how much he/she makes and you will likely get an inflated number because no one wants to be seen as poor or struggling or not ‘on the way up’.
Ditto for corporations, especially those that rely on suckers … er … investors to keep them afloat and paying out those multi-billion dollar bonus’.
And governments have not put out realistic numbers for decades because the jig would be up and there would be a huge demand for guillotines and hanging ropes by the masses.
Then there are the masters of lies, the banking cartel. If the average sheeple knew how the system really works, there would be an armed revolution.
Interesting times…
Davy, Hermann, MO on Fri, 14th Mar 2014 2:48 pm
These production numbers are primarily self reported by the producing countries. What nation would jeopardize their sovereign debt ratings by reporting anything but increasing crude production? Anything but good news affects their bond rates, and ability to raise foreign capital. Reports of declining production would likely weaken, and could destabilize the regimes that are now in power.
Very good point Short, I have a finance bend and I didn’t even think of that. I knew about the excessive reserve reporting that started several years ago related to opec limits but this is another logical reason!
Dave Thompson on Fri, 14th Mar 2014 2:57 pm
Iraq has been in turmoil for many years. The Iraq crude production could conceivably be up now if western technology and engineering has gotten on board. The numbers tell the real story,peak OPEC production at 31 m/bbls however now someplace at 30 m/bbls.
shortonoil on Fri, 14th Mar 2014 3:50 pm
“Very good point Short, I have a finance bend and I didn’t even think of that. I knew about the excessive reserve reporting that started several years ago related to opec limits but this is another logical reason!”
We look at the model (which has shown itself to be quite robust overall) and then compare its output to what others are saying. Of course there is always a certain amount of error in any analysis. But at some point the spread becomes so large that you have to ask, “what the hell is going on?” That’s when you find the fly in the ointment!
http://www.thehillsgroup.org/
shortonoil on Fri, 14th Mar 2014 4:02 pm
“On an annual basis, self reported OPEC 12 crude oil production (crude only, not C+C) has been flat to down since they hit 31 mbpd in 2005.
If we look at crude only, which is generally defined as 45 or less API gravity oil, I suspect that virtually 100% of the increase in global liquids production since 2005 has been from byproducts of natural gas production (condensate & NGL’s) and from biofuels.”
Don’t think there is any doubt about that. If you also consider that 50% of shale production is field condensate (mostly pentane) and pentane has 57% of the energy delivery capability of conventional crude, and doesn’t make transportation fuels to any extent, we are hardly getting ahead! If you also take into consideration that conventional crude production is going down, we are losing ground.
Get your ECI model out, I’m sure it will tell you the same thing.
Plantagenet on Fri, 14th Mar 2014 4:13 pm
Good to hear that Iraq is greatly increasing their oil production, with thanks to George Bush for removing the tyrant Saddam. The new Iraqi oil boom will help both the global economy and the Iraqi people.
rockman on Fri, 14th Mar 2014 4:24 pm
And, of course, it’s good to remember what role $100/bbl oil has had in the increased Iraq oil production just as that in the US. IOW how much oil would they be producing in both theaters if oil were still selling for $30/bbl? Or put differently: how much would oil production have increased if the world wasn’t paying $2+ TRILLION/year more for oil today then it was just a decade ago?
bobinget on Fri, 14th Mar 2014 4:37 pm
No mention as to where most of this ‘new’ oil is headed. Russian giant Gazprom is busy hooking up new Iraqi production. This should give us some idea.
Yes, our kids died to protect Russia’s oil.
Strongman Of the Month, Putin, is using this entire Ukraine disaster as a distraction. The main chance..Syria, remains the West’s predominant security threat. OPEC is no longer the cohesive cartel
it once was. Four of it’s largest contributors are fighting cold and proxy wars with each other.
Along with Russia, Iran and Iraq are supporting Syria’s regime with Hezbollah boots, Russian arms and tactics.
Saudi Arabia and the US are supporting selected rebel
forces, “The Free Syrian Army”, so called. Syria has become a magnet for Islamic fighters of dozens of nations but primarily from Saudi Arabia. Rebel forces are constantly fighting with each other over religious differences.
Nigeria wil soon request American aid to fight Islamic
terrorists. We apparently need to defend China’s oil too. Little mentioned here but six BILLION in oil money went missing last year, apparently, no one knows where it went! This won’t end well.
Finally, Venezuela’s political situation is getting more bloody by the day. (22 dead protesters) This has deepened into a class, not religious war. If an old ruling class manages to regain power, tell China to forget those oil exports for a while.
Putin sees his chance for Russian greatness guessing
OPEC is finished as a working cartel. A combination of Iran, Iraq and Russia can and will successfully challenge OPEC, (KSA) for dominance. (This is why Russia, or Saudi Arabia will never give up on Syria)
Putin is also attempting to corner world potash supplies but that’s another story. There is a pattern here.
While so much news attention is being paid to a one missing 777, KSA and Qatar have broken relations over
support of bankrupt Egyptian “Muslim Brotherhood” .
As it turns out, the Islamic World feels less brotherly
in a Biblical sense, daily. If the Saudis ‘sanction’ Qatar
prohibiting oil exports, it will be the final nail in OPEC and the beginning of Russia’s Oil and Gas world dominance.
IMO Putin is thinking dozen of moves ahead while the world chases ghosts.
When Israel annexed Jerusalem, we said ‘tut-tut’.
When Israel annexed Golan Hight’s there was no talk of sanctions, none. When Putin Marched into Georgia, GW Bush sympathized but did nothing. Russia & Iran support a Fascist regime in Syria, displacing five millions, killing hundreds of thousands. Saudi Arabia and the US are determined to fight to the last Syrian.
rollin on Fri, 14th Mar 2014 4:53 pm
Looks like OPEC still has some swing left, despite troubles in certain countries. Their total output is on the low side of the range but not outside of it.
Rock is right of course, the extra money sure helps to push the same amount of oil out of the ground instead of dropping production. I do wonder if the effect of higher oil cost would have much effect on production. Increasing the cost of oil by several times has had only a small effect on increased total production, a very small effect. Money seems to be fighting an uphill battle.
westexas on Fri, 14th Mar 2014 6:01 pm
Here are the 2012 annual data for Iraq from the EIA (total petroleum liquids + other liquids for production, total liquids for consumption).
Production: 3.0 mbpd
Consumption: 0.75
Net Exports: 2.25
It looks like 2013 Iraqi production might average about 3.1 mbpd, and consumption increased at about 6%/year from 2008 to 2012. So, basically Iraq’s net exports will probably be up very slightly or flat from 2012 to 2013.
I define Global Net Exports of oil (GNE) as the combined output of the top 33 net oil exporters in 2005. GNE has been below the 2005 level of net exports for seven years, through 2012, and probably through 2013 too.
Iraq is one of seven of the (2005) Top 33 net oil exporters that showed an increasing ECI ratio ( Export Capacity Index, the ratio of production to consumption) from 2005 to 2012. The other 26 countries showed a declining ECI ratio (which means that 26 of the top 33 net oil exporters in 2005 are trending toward, or have arrived at, zero net oil exports, when their ECI Ratio would be equal to 1.0).
And to put Iraq’s rising net exports in perspective, consider Norway’s declining net exports (total petroleum liquids + other liquids, mbpd, EIA):
Iraq:
2008: 1.8 mbpd
2012: 2.2
Norway:
2008: 2.2 mbpd
2012: 1.6
Iraq + Norway:
2008: 4.0 mbpd
2012: 3.8
Or, as Iraq has shown an average rate of increase in net exports of 100,000 bpd per year since 2008, Norway’s net exports have fallen at an average rate of 150,000 bpd per year since 2008. It’s odd that the media only seem to talk about countries with rising production and rising exports.
rockman on Fri, 14th Mar 2014 8:25 pm
Rollin – “Increasing the cost of oil by several times has had only a small effect on increased total production, a very small effect.” And that’s the critical point. Granted it’s a hypothetical but where would oil production be today if it were still $30/bbl? But that quickly brings you back to the chicken/egg dynamic: how can we be sliding to PO if oil production isn’t diminishing. But as it slides it becomes more expensive…to a point. But that leads to more drilling. But only drilling that’s supported by those high prices. And, most importantly, only as long as there are drilling prospect out there that can be supported by those high prices. And when there are not many of those economic prospects left to drill but the global economies can’t afford a significant amount of oil at the higher price needed to support the remaining drilling opportunities…then what?
So little oil drilling left to do and no ability to pay higher prices for the limited amount of oil being produced. So the BIG question then becomes: who gets to consume what oil is left? I think the answer is simple: whoever is in control of it while it’s still in the ground.
GregT on Fri, 14th Mar 2014 9:59 pm
“the extra money sure helps to push the same amount of oil out of the ground instead of dropping production.”
That would be like putting the cart ahead of the horse. Money is debt, and debt is a claim on future output. It is energy that allows the issuance of money, it is not money that creates energy. When future output is no longer ‘big’ enough to cover the repayment of the ‘money’, the entire system becomes mired in debt. Just like what we are seeing around the globe right now.
If we could issue our own currencies, without the attached interest, then future output would not need to be larger than today. That still would leave us with some pressing predicaments however, like population overshoot, climate change, and environmental destruction. All fossil fuels should have been left where nature stored them to begin with, in the ground. All of the technologies in the world will do us little good, if there is no world left to use them in.
Nony on Sat, 15th Mar 2014 12:32 am
I don’t care where the oil heads as long as it heads. Yeah, I’d prefer it go into pipelines or sea transit that we control. But if it’s a choice between flowing through a bad place or not flowing at all, I pick flow. Oil is a world priced commodity and I want more volume to drive the price down. More money staying in the West and less going to Putin and the Arabs.
rollin on Sat, 15th Mar 2014 1:48 am
Right now OPEC produces the majority of oil in the world. The world is generally content to take their excess production and maintain the status quo.
When the decline gets more obvious and technology does not come to the rescue, the status quo will fall. It’s anybody’s guess as to the results, but they will not be even and production will oscillate. Exports will decrease and flow in new directions.
GregT on Sat, 15th Mar 2014 7:51 am
“I don’t care where the oil heads as long as it heads.”
And herein lies our biggest problem, greed. The Iraqi people deserve every bit as good of a life as everyone else on this planet. Stealing from someone else to satisfy insatiable appetites for crap that we do not need, is not only greedy, it is unjust, and morally apprehensible.
“Oil is a world priced commodity and I want more volume to drive the price down.”
I WANT, I WANT, I WANT. Just like a selfish little child, no consideration given to anyone else but itself. It is about time we grew up as a species, but unfortunately we are being dragged down by the lowest common denominator. We have a very short window of opportunity left, to either grow up, or wipe ourselves out as a species. It is ignorance like this, that will be the end of us all.
peakyeast on Sat, 15th Mar 2014 11:41 am
Oh im sure the iraqi population is overjoyed at paying off their debt for the war on them to the US.