Iraq Adds Oil-Export Facility to Offset Output Drop in Kurd Feud

Iraq began using a new offshore crude-exporting facility to help boost shipments by sea and make up for a suspension of pipeline exports from the country’s north due to a conflict with the self-governed Kurdish region.

The supertanker Chloe, which can transport about 2 million barrels of oil, was moored at the new loading point in the Persian Gulf off the coast of southern Iraq on Monday, according to shipping agent reports and Bloomberg tanker tracking. Oil Minister Jabbar Al-Luaibi said last week that southern exports would rise by 200,000 barrels a day to offset production that halted at some northern fields in the aftermath of fighting over disputed territory.

Iraq, OPEC’s second-largest producer, joined the Organization of Petroleum Exporting Countries and allied suppliers this year in cutting output to mop up a glut of crude that has depressed prices by half since 2014. That hasn’t stopped the country from trying to boost its capacity to pump and sell oil; it aims to raise production capacity to 5 million barrels a day this year. Iraq currently pumps most of its 4.47 million barrels of daily output from fields in the south and ships them through the Persian Gulf.

“The new loading point will help them boost exports,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group, which operates in Iraq. The loading point, known as a single point mooring facility, or SPM, had been scheduled to start operating in December, and it isn’t at full capacity, he said. “The government started the SPM earlier than planned because they want to raise exports from Basrah to compensate for the losses at Kirkuk.”

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Geographic Constraints

Iraq exported an average this year of 3.25 million barrels a day of its Basrah Light and Basrah Heavy crude via the Gulf. The vessel Chloe is set to load a mixed cargo of Heavy and Light oil, according to the shipping agent report.