Less oil, less money to toss around

By Dave Anderson:

And now back to forgotten Iraq, via Musings on Iraq:

In 2009 Iraq finished with averages of 2.02 million barrels a day in production, and 1.59 million barrels a day in exports. For December it
produced 2.40 million barrels a day, while exporting 1.91 million
barrels a day. Overall, both production and exports averages for 2009
were down from the previous year
when Iraq pumped 2.41 million barrels a day and exported 1.84 million
barrels. In fact, 2009 broke a four-year trend of yearly increases in
production and exports that began in 2005.



This was a disappointing finish for a number of reasons. First, the Oil Ministry set a goal of 2.50 million barrels a day in production,
which was only achieved in September and October 2009. Second, the
Iraqi budget called for 2.00 million barrels a day in exports, which
only happened one month, July. This is especially important because the
government relies upon petroleum for almost all of its revenue, and is
currently running a $16 billion deficit.
Third, one of the major reasons for the inconsistent oil exports were
three attacks upon the northern pipeline that goes to Turkey.

For four years, Iraq saw increasing quantities exported in an environment of increasing prices.  That created plenty of money to slosh around to satisfy or buy-off local concerns.  Now Iraq saw a drop in exports and lower prices.  Iraq's budget depends on oil, and it does not have massive cash reserves like the GCC or most OPEC members, so its budget deficit means either Iraq will need to access the foreign capital markets, raise taxes, get bailed out by the US, or at least US loan guarantees, or make cuts and piss people off if exports don't pick up again. 

And remember, cutting pipelines is fairly easy when the community in which the pipelines are going through think they are getting screwed on the deal.  We saw that in 2003, 2004, 2005 and more recently three times this fall.