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Your Questions About Iraq's Oil Infrastructure Answered

Tyler Durden's picture




 

From Deutsche Bank

Iraq Oil Infrastructure At Risk

The outbreak of violence in Iraq by Sunni rebels belonging to Islamic State of Iraq and the Levant (ISIL) has introduced new event risk for global oil markets... [T]he escalation in geopolitical risk in Iraq has so far been confined to the north of the country. As a result, it does not yet pose a significant threat to the country’s oil production since the northern region represents only a small proportion of total Iraqi oil production.

Of the major fields in the northern region, the Kirkuk oil field is under the control of Kurdish security forces, and is therefore secure for the time being. However, the possible impact to refining capacity is a greater concern as the country’s largest oil refinery (Baiji, 310kbd) is located near Mosul. However, current reports indicate this facility is operating normally.

In terms of its geographical reach, the ISIL projects its influence from strongholds in the western governorates of Al-Anbar and Nineveh, Figure 1. On Wednesday of this week, it was responsible for taking Mosul, the second-largest city in Iraq. The speed of ISIL progress and its fortification with newly acquired weaponry suggests that this may be more than a temporary incursion. In addition to Mosul, ISIL now occupies Tikrit, Dhiluiya and Yathrib and, according to Reuters, seeks to establish a Sunni caliphate on the border between Iraq and Syria.

While the west and north of Iraq is relatively sparse in its oil infrastructure, eastern and southern regions are of greater importance. If ISIL is able to make southward progress towards Baghdad this will heighten instability in the country and possibly threaten the smooth operation of existing refineries and oilfields. Of most concern would be any detrimental impact on investment in new capacity. The next phase of development for the country’s oil sector is meant to bring oil production closer to its planned targets of 4mbd by the end of the year and 5mbd over the medium term. The largest of these developments is the West Qurna 2 field which began operation at 120kbd in March 2014 and is expected to ramp up towards 1mbd by 2030. [ZH: readers may be surprised to learn that the largest stakeholder of West Qurna II, with a 75% ownership, is none other than Lukoil, i.e. Putin)

From a global oil perspective we expect the latest events in Iraq will sustain strong fundamentals for Brent crude oil. Indeed the slow recovery of Libyan crude oil exports alongside ongoing sanctions against Iran contrast with the strong growth in non-OPEC supply growth and specifically US crude oil production. We may therefore be witnessing the start of a more divergent supply picture between Brent on the one hand and WTI on the other.

Iraq oil infrastructure

In terms of crude oil production trends, Iraq produced 3.34mbd in April against a sustainable production capacity of 3.65mbd as estimated by the IEA. The country’s main export routes for crude are through the Iraq-Turkey Pipeline (ITP) system to the north, and via the port of Faw on the Persian Gulf. The ITP, also known as the Kirkuk-Ceyhan Oil Pipeline for its point of origin and terminus in Turkey, has a theoretical capacity of as much as 1.6mbd but a usable capacity of only perhaps 0.7-0.9mbd owing to damage caused by periodic bomb attacks over the past 10 years. The pipeline has been closed since 2 March for repair work.

The port of Faw is linked to two offshore tanker loading facilities, Al Basra and Khor al Amaya. Al Basra Oil Terminal has four berths and a capacity of 2.0mbd which could be raised to as much as 3.6mbd with an upgrade of pipeline infrastructure. Khor al Amaya has two berths and a capacity of 0.8mbd which could be lifted to 1.8mbd with a similar upgrade, according to Platts.

In terms of refined products, domestic refined product demand totals approximately 760kbd against domestic refining output of roughly 600kbd, making Iraq slightly short products supply. Refinery configuration is primarily hydroskimming (750kbd) with the Baiji refinery in the north being the only hydrocracker (310kbd). This is broadly representative of the breakdown of refinery capacity across the Middle East.

Conclusion

The latest escalation in Iraqi tensions has introduced new event risk for global oil markets. However, current options market pricing suggests oil markets are still attaching a low probability to an oil price spike over the coming months. We believe this sanguine approach to oil price spike risk reflects the fact that the major oil infrastructure in Iraq has not (yet) fallen into the hands of the militant extremists.

 

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Fri, 06/13/2014 - 14:58 | 4854397 hedgeless_horseman
hedgeless_horseman's picture

 

 

...the major oil infrastructure in Iraq has not (yet) fallen into the hands of the militant extremists.

Fri, 06/13/2014 - 15:01 | 4854418 Broken_Trades
Broken_Trades's picture

Kirkuk has a few billion bbls left in the ground but is only producing at 160,000 bbls/day.

 

Fri, 06/13/2014 - 15:04 | 4854433 economics9698
economics9698's picture

We are broke.  The Harvard idiot is in the White House.  I smell defeat in the air.

Fri, 06/13/2014 - 16:00 | 4854639 Thought Processor
Thought Processor's picture

 

 

And he'll be in place until the next idiot is put in.

 

The US has been used as a capatilist tool for over a century and now it's reached it's expire date.

Therefor it must be brought down.  

 

Maybe people will wise up to the whole charade someday.

Fri, 06/13/2014 - 22:32 | 4855738 GoldenTool
GoldenTool's picture

It is already too late.  Save your own and try to help those you care for.  

Remember the ship sinks slowly at first until there is no more upthrust.

My fear is holding the financials together might be the last of the upthrust.

Like a ship sinking the end could come quickly.

"est quasi lapis"

Fri, 06/13/2014 - 16:03 | 4854650 Flakmeister
Flakmeister's picture

W., the only president with Yale and Harvard on his CV....

Fri, 06/13/2014 - 23:06 | 4855790 MontgomeryScott
MontgomeryScott's picture

I'm going LONG 'Arbusto'.

Sat, 06/14/2014 - 09:58 | 4856372 Flakmeister
Fri, 06/13/2014 - 15:01 | 4854419 Broken_Trades
Broken_Trades's picture

Kirkuk has a few billion bbls left in the ground but is only producing at 160,000 bbls/day.

 

Fri, 06/13/2014 - 23:04 | 4855752 MontgomeryScott
MontgomeryScott's picture

@ hedgeless_horseman,

Definite up arrow for the Mad Max video attachment (how in the fuck did you do that? I send links sometimes, but you put a frigging video in the comments!).

I see that they have taken Mosul, in Ninevah. I seem to recall a Biblical story about Ninevah. God commanded some dude named Jonah to go to Ninevah, to warn the people about the coming judgement, and it scared him shitless, because the people there were so fucking barbaric and cruel. Not much has changed in 4 millenia, I think.

Sunnis versus Shi'ites, and the battle rages for thousands of years now. Mohammed, smiling from his grave, encourages both sides as they kill each other over desolate sands, laid waste by God, and irradiated with DU by the CONUS, and all for the love of money in the form of 'petrodollars', as goaded on by the Zionists.

I find it quite ironic that the Kurds are keeping their region secure (supposedly). after Saddam used the CONUS-supplied biologicals to try to eradicate whole towns in the 1980's, and Iran decided to stop this evil fuck who had fallen under the sway of the PETRODOLLAR riches (and in turn, suffered horrifically), and the CONUS and the USSR fed the fires of the 10-year PROXY war; supplying the sides with mutitions; as the bankers on both sides profited from both the loans to keep the military machines going AND the rise in oil prices because of the 'conflict'), but the KURDS were NOT eradicated (the attempted genocide of an entire race, by the way).

GEE. Do you think that the House of Saud might be possibly involved here? HOW MANY of the supposed 'hijackers' on 9/11 were from Saudi Arabia? Was it 12, or 14? Sometimes, the facts get all messed up in the end reports. I hope I don't get their sectarian beliefs incorrect, but aren't the Saudis SUNNI WAHABI-ISTS? UM, and aren't the 'Al-Quaida' people (like their projenitor, the black-sheep son of Saudi Construction Magnate 'Bin Laden', whose name is/was 'Osama/Usama/Tim Osman') actually allied with the American C.I.A.?

Out of CHAOS, ORDER. NOVUS ORDO SECLURUM.

Well, I guess they will 'monitor my phone calls', and 'record my postings', and if that gets them off, then I've made some twat in Alexandria or Haifa happier; because they have finally found 'someone who can see'

 

They will probably get all extatic, and have to masturbate; and then get angry because they forgot their toilet paper to wipe up the pitiful three or four drops of ejaculate; and turn their anger and shame upon ME; before they send the various forces of the 'happy, shiny' government out to confiscate me (and my computer).

HA HA HA! They released five 'TALEBAN' for a turncoat from a LEFT STATE COMPOUND region (McCall, Idaho), named 'BOWE'?

GTFOOH! Is this like 'BOW DOWN' (like Obama does to the Saudi Princes), or 'BOW DOWN' (like 'Bow down and take my cock up your ass, you stupid white liberal bitch'! Allah Ackbar!)? OI, I cant get off on men who like a schlong in their tuckus!

The TALEBAN was the duly elected POLITICAL party in Afghanistan, that all but ERADICATED the production of OPIUM by the year 2000, and REFUSED to let the oil magnates build a pipeline across their country! (Sorry, SOME like to spell it 'TALIBAN', I suppose.)

Perhaps the KURDS still have 'family values'.

 

 

 

Fri, 06/13/2014 - 14:58 | 4854405 tempo
tempo's picture

We defend oil field and sell arms.

Fri, 06/13/2014 - 15:14 | 4854453 CrashisOptimistic
CrashisOptimistic's picture

Not a bad analysis, but some specifics are weak.

It's summer.  Consumption ramps in summer because air con is fueled by oil driven generators.  So when the analysis says Iraq is slightly short of petroleum products (gasoline), they are a bit wrong.  That's an annual average and summer is a spike in consumption, so they are more than jsut a bit short.  Not a huge problem.  Importable.  ISIS could be expected to vector output from that refinery to their own vehicles, though.

There is a significant issue with payment.  The 20% or so of oil flowing out of the north and who is paid for it has been the subject of negotiations between Baghdad and the Kurds for some time.  Baghdad wanted to be paid and would then distribute monies according to government budget.  The Kurds said fuck you and that problem had not yet been settled.

With some of that flow now in ISIS hands, they could demand direct payment. 

Let's be sure of one thing more than all else.  There is no significant spare capacity in the gulf that can offset loss of any Iraq flow unless sanctions on Iran were reduced to zero.  KSA is not going to replace any Iraq oil. 

US production rise is flattening out now.

Chinese consumption increase is not flattening out.

 

 

Fri, 06/13/2014 - 15:54 | 4854624 Thought Processor
Thought Processor's picture

 

 

Thanks Crash, always a pleasure.

Sat, 06/14/2014 - 00:05 | 4855868 MontgomeryScott
MontgomeryScott's picture

Your post is scatologically short of some specifics regarding the names and the places and the reasoning for this current Hegelian upheaval, in a quaintly naive post-FED-RES American fashion.

FIRST, we had 'Al-QUEDA'. That was a mixture of 'mukunized Arabic ('Al', or 'descended from'), and 'murcunized' Mexican Spanglish ('Queda', the root word used in favorite 'messican' fast-food, like 'Quesadilla'; you know, a cheese-filled Tortilla). SO: We have a 'terrorist' group that is easily recognizable as 'FROM THE CHEESE' to most red-necked white crackers. HEY, since 'W' was from TEXAS, and all, let's use two descriptors that idealize the hatred of TWO of the most easily-despised people, 'towelheds', and 'wetbacks', and COMBINE them...

NOW, we have ANOTHER easily identifiable 'acronym' to deal with (and is being presented as another so-called 'straw-man'), for the more 'intelligent' in the dumbed-down 'INTELLIGENCIA' in the 'northern' states' (as well as members and acolytes of the Bohemian Grove). ISIS.

Well, ISIS was the name of some Egyptian 'goddess', that was supposedly the 'ideal mother' back then, and every Harvard-educated shithead will IMMEDIATELY hate this 'bitch' CIA construct; perhaps of some latent 'Odipus Complex' thing (as taught by Bernays's cousin FREUD, and pedaled as 'SCIENTIFIC' by the psychiatrists and sociologists nation-wide).

http://en.wikipedia.org/wiki/Isis

Have you ever heard of the 'strategic oil reserves' that the CONUS has? There is this one place, named 'Gull Island',... somewhere in Alaska.

"O.K. LET US ALL... BE SURE... OF ONE THING... MORE THAN ALL ELSE..."

Here. Let me fuck your mind up, and break your silly misconceptions, and derail your ignorant propaganda.

SHALE OIL is a SCAM. It is poisoning the deep water resevouirs, and is not producing SHIT.

This was to be expected.

Since oil is an ABIOTIC substance, all the oil companies are trying to tap the deeper wells (like the MANCONDO blowout, or the KOLA SG wells). ROCKS (SHALE, you twits) are above the region where this naturally-occurring substance is produced. The MANTLE is shallower in some places than others. Sometimes, they only have to drill down 30,260 feet below the seafloor of the Gulf of Mexico, for example (before the pressure overcame the man-made safety valves, and ruptured the crust, as well as blowing up a couple of drilling rigs and killing several people). The KOLA SG wells in Siberia were deeper, and it is claimed that they went to almost 45,000 feet, before the motherlode of oil overwhelmed the Soviet safety valves). THEY are trying to squeese blood from a dead turnip, becuse there 'used to be oil in the rocks'. STUPID MOTHERFUCKERS!

Hush, now; don't you cry.

http://www.youtube.com/watch?v=LniY0pDQGaE

"CHINESE INCREASE IS NOT FLATTENING OUT".

YES, it IS. Every Chinese woman I have met is particularly 'flat' in the regions that COUNT. It has ALWAYS been this way, and will always be this way, for the forseeable future. This seems to piss of the Chinese men, who are mostly inadequate for their wives in the increase that their women want from them.

DAMN. I hope you're not Chinese, because if you are, I must have really pissed you off!

Fri, 06/13/2014 - 15:08 | 4854448 LawsofPhysics
LawsofPhysics's picture

The spice must flow...

Sat, 06/14/2014 - 02:58 | 4856025 MontgomeryScott
MontgomeryScott's picture

I did not say this. I am not here.

The house Harkonin and the house Atreides will both fight over the Spice planet... I have promised them both several legions of troops...

http://www.youtube.com/watch?v=AGqdE1NdMTg

Fri, 06/13/2014 - 15:11 | 4854471 U4 eee aaa
U4 eee aaa's picture

If I see a talibanner, I'm going to have to thank him for the 500 bucks he put in my pocket over the last couple days. It's for days like this that I built my positions around always having a stake in the energy markets. If you trade after the news event you have lost much of the equity momentum

Same goes with gold

Fri, 06/13/2014 - 15:43 | 4854593 jukin
jukin's picture

Looks like Obama is choking off oil supply. What is Libya pumping out? About 1/4 of what it was under Kahdafi.

Fri, 06/13/2014 - 16:05 | 4854655 Flakmeister
Flakmeister's picture

Someone is choking off the oxygen to your brain if you think O is trying to curtail supply...

Sat, 06/14/2014 - 00:19 | 4855899 MontgomeryScott
MontgomeryScott's picture

You're pretty ignorant, says me.

It's NOT about the SUPPLY of oil. There's LOTS of oil, and no end in sight, as long as our planet exists.

It's about the CONTROL of the supply, and the PROFITS to be made.

Obama is TREALLY pretty stupid (and an owned puppet), and has no conception of the stupidity that he inhabits. He simply does the things that his masters command (you silly twit). His 'masters' are just as deluded, though.

ROCK the CASBAH!

http://www.youtube.com/watch?v=bJ9r8LMU9bQ

Posting the TRUTH, since 1982!

DROP THE BONG, AND COME OUT WITH YOUR HANDS UP!

 

 

 

Sat, 06/14/2014 - 00:21 | 4855905 Flakmeister
Flakmeister's picture

Save this for the Right Wing AM radio talk shows, they love that shit... 

Sat, 06/14/2014 - 03:09 | 4856031 MontgomeryScott
MontgomeryScott's picture

Thanks for the advice, Ms. Jarrett.

Did you hear the one about the 'micro-nukes', and the 'space-based weapons' that REALLY took down the 'twins'? ACTUALLY, the towers NEVER existed. They were HOLOGRAMS, you know. Glen Beck and Rush Limbauh are doing an 'expose' next week, and we will all REALLY KNOW the facts (thank the FED!).

 

WHICH division of the MKULTRA branch did you say you're with, again? The name 'Flakemeister' sort of reminds me of Pillsbury, and the 'Dough Boy'.

'Poppin-fresh dough':

http://www.youtube.com/watch?v=MLFQuu-Svig

I never realized how much FUN it is to bake.

Sat, 06/14/2014 - 09:56 | 4856369 Flakmeister
Flakmeister's picture

Zzzzz...

Fri, 06/13/2014 - 16:29 | 4854743 goldhedge
goldhedge's picture

Since most of the Oil contracts are Non-US it made sense for the White House to "let" ISIS cause some chaos.

 

 

Fri, 06/13/2014 - 19:50 | 4855330 assistedliving
assistedliving's picture

As Brent rises, watch how the Iranians start getting feisty vis a vis the nuclear negotiations.

same applies to Putin.  and that is an unholy alliance we've seen before.  we are in so over our

heads its coming out of our arse.  thank _llah there isnt an oil man in sight and a human being

is in the WH.

Fri, 06/13/2014 - 20:25 | 4855422 williambanzai7
williambanzai7's picture

Sustain strong fundamentals for crude oil...

This how an idiot trying to sound important says: crude prices will go up

Sat, 06/14/2014 - 01:54 | 4855982 MontgomeryScott
MontgomeryScott's picture

I gave you an 'up-arrow', although I do not agree with your analysis, WB.

'Sustain strong fundamentals for crude oil...'

THIS is a message from the Illuminated ones on the FAR SIDE of the current NWO dichotomy, to others who are not as well eludicated as they THINK they are; to INVEST in OIL FURURES contracts, because THEY have a saying: 'Strike while the iron is hot'. BILLARY was a 'hot chick', when she was kicked off of the team that was investigating Nixon, you know. I hear she went 'both ways'.

Do you think that GASPROM or LUKOIL are 'listening'? Well, MY broker is E,F. Hutton, and E.F. Hutton sez:

http://www.youtube.com/watch?v=g3DZCn6g9gY

http://www.youtube.com/watch?v=gX0X9i7J_JE

http://www.youtube.com/watch?v=vNSr1MvWBA4

It appears that the tag-team made up of Bush and Obama (the'B.O. Team') has not 'entirely' fulfilled Valerie Jarrett's 'wet-dream' of world domination.

Doctors can be women, you know, in the modern age of 'DR. EVIL', over here in the WESTERN LAND, with the WEST-END GIRLS. You have to watch out for the East-end boys, though. They like to make up for their lack of virility and size by becoming violent when they try to rape your virgin ass.

http://www.youtube.com/watch?v=vXRqGfF64zQ

 

 

 

 

 

 

Fri, 06/13/2014 - 22:44 | 4855759 Schacht Mat
Schacht Mat's picture

This chaos is intended to raise oil prices to about $115 / barrel, which is the price at which The Kingdom (House of Saud) needs the price to be to meet their stated obligations to their subjects (including the Shiites in eastern Saudi Arabia who happen to be inhabiting the land over the Ghavar oil field) to avoid their own version of the Arab Spring (this worries the principals in The Kingdom).  This is going to be a fine balance, as anything under $115 threatens the mid term stability of Saudi Arabia, while anthing much over $125 will likely impair whatever first world economic activity we currently enjoy.  The supply issue is really rather mute, as rising prices will choke off a lot of the far east demand (their growth rate is impressive, but is highly sensitive to price).  This is why ISIS has been allowed to get as far as they have (how long does it take to project combat ready ground support from forward NATO bases in Europe, Saudi bases, Diego Garcia or naval assets in the Arabian sea ???).  Plus, as an adder, this crisis will make the current ruling elite in Baghdad more beholden to the US than ever before (their enthusiasm was waning, but a little well publicized Al Queda brutality should refocus their attention in a hurry)  I suspect that the main play is to draw the Russians into open support of this Iranian sponsored excursion (supported through Syria - hence based in Western Iraq - also a desolate area and not immediately linkable to Iran by brain dead 8 second sound bite types) and then properly smack them down and teach Russia a lesson - after all - Iraq is the US military's playground - home turf - and projecting power is something the US forces do well (its the aftermath that leaves them clueless).  So far, however, the Russians are not biting (amazing what can happen when your foreign affairs advisors have decades of experience in the field as opposed to months of pampered schooling in Ivy League self congratulating circle jerks) so the waiting game continues to be played out.  The State department children better watch this one carefully, or it might just run away on them.  If the mess becomes too great, then there will not be enough US friendlies on the ground to support by projecting US power into ISIS forward operating areas.  I hope the Ivy Leaguers didn't sleep through that lecture ......

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