LONDON (Reuters) - Iraq aims to boost oil exports by up to 400,000 barrels per day over the next two months as it opens the taps at a new Gulf outlet, a senior Iraqi oil industry source said on Tuesday, signaling the world’s biggest capacity expansion this year.
Now in year three of a bold oil development program, Baghdad finally may be able to export all the extra oil extracted from its supergiant fields by foreign oil companies.
Widely-flagged export constraints and infrastructure bottlenecks have kept some new oil in the ground and left southern exports running at around 1.7 million bpd for much of last year.
But as the first of three single point moorings (SPMs) starts up, sales of Basra Light crude from southern Iraq are expected to rise by up to 200,000 bpd in February to 1.9 million bpd, while shipments could reach 2.1 million bpd by March, the source told Reuters.
“The program for February is finalized,” he said. “If all goes well, exports of Basra Light will reach 1.9 (million bpd).”
Shipments of northern Kirkuk crude are expected to remain steady at around 400,000 bpd, meaning Iraq’s total exports will reach roughly 2.3 million bpd - a record high since the war in 2003.
Rates this month are expected to run at around 2.15 million bpd - little changed on December.
The source said that by March the southern supergiants of Rumaila - operated by BP (BP.L), West Qurna-1 - led by Exxon Mobil (XOM.N) and Zubair - run by Eni (ENI.MI) - could easily produce enough to supply a Basra Light export program of 2.1 million bpd.
Rumaila, Iraq’s biggest producer, is now pumping about 1.4 million bpd, up from an average 1.25 million bpd last year. West Qurna-1 is producing roughly 390,000 bpd and Zubair is around 250,000 bpd, industry sources said.
The fields of Missan and al-Ahdab will also contribute to the flow of Basra Light exports.
Iraq’s production has climbed by more than 300,000 bpd since the first service contracts were awarded to international oil companies in 2009. Industry sources expect to see further growth of 300,000 bpd this year, taking output to 3 million bpd, allowing for exports of 2.5 million bpd.
Basra Light shipments were stuck most of last year at around 1.7 million bpd as exports hit the buffers in the south. Iraqi officials had expected to open the first of three new SPMs on January 1, but testing was delayed.
The other two SPMs - part of a $1.3 billion export expansion project in the Gulf - will be installed by the end of the year.
Iraq’s State Oil Marketer (Somo) has meanwhile sent official notice to customers that the first 900,000 bpd SPM would start up from February, the Iraqi industry source said.
“They do seem confident of achieving the higher levels, but we’re still a bit cautious,” said an oil market source.
Higher Iraqi flows will come as good news to customers from Europe, India and China that are seeking to replace supplies from Iran, which is under threat of tighter sanctions from the West because of its nuclear program.
The Iraqi industry source said some customers had sought higher term contract volume for 2012 in anticipation.
“They were a step ahead,” he said. “They wanted to secure alternative supplies as early as possible.”
Reporting by Peg Mackey; Editing by Anthony Barker