Iraq may face oil sale shortfall
A halt in crude oil pumping along Iraq's northern pipeline to Turkey raises doubts about Baghdad's ability to meet commitments to sell more than 300,000 barrels per day, traders said yesterday. Iraq has stopped pumping oil along the pipeline after a power cut at Kirkuk's oilfields, the Iraqi Oil Ministry said.
The halt has reduced stocks at Turkey's Ceyhan port to between 400,000 and 500,000 barrels, according to a shipping source. "The longer it's closed the more concerned we become," said a trader whose company buys Kirkuk. "It could be very difficult with stocks so low," he said, when asked whether Iraq could meet its contract volume.
A delay would hinder Iraq's efforts to boost revenue from oil exports, which have been mostly taking place from the south.
With oil prices near a record high, world markets would also notice the supply loss.
Baghdad allocated the Kirkuk volume in the wake of more reliable flows along the pipeline, which has been idled by sabotage and technical problems for much of the time since the US-led invasion in March 2003.
An engineer at the Kirkuk fields in northern Iraq confirmed that a power cut was to blame for the halt in pumping, while an Iraqi oil official said he expected exports to restart soon.
"There is plenty of oil stored in Iraq and we expect to resume pumping as soon as possible," the official told Reuters. "We're aiming to export at least 350,000 (barrels per day) in February."
So far, Iraq has committed to sell 327,000 bpd of the crude in term contracts.
Some in the industry remain sceptical that Iraq will sustain a regular flow of Kirkuk. A previous attempt to do so proved short-lived due to renewed bombing of the pipeline.
Four tankers are expected to arrive at Ceyhan in the period to January 28 to take Kirkuk crude, according to shipping industry sources.