Iraqi Oil Officials Clamp Down on Information Flow Amid Pipeline Sabotage

Iraqi oil officials have imposed a blackout on information regarding the country's oil sector, banning executives from issuing updates on pipelines and oil infrastructure. This decision has led to a confusing array of misleading or contradictory information based on anonymous sources, exacerbating oil market volatility. The lack of detailed information has created a challenging environment for traders, who are now skeptical of news reports and production data from Iraq. Iraqi officials justify the information crackdown, citing the fluid and often illogical situation on the ground.

Key Takeaways:

• Iraqi oil officials have banned executives from issuing updates on pipelines and oil infrastructure, leading to a lack of detailed information and conflicting reports.
• Iraqi insurgents and saboteurs have increased attacks on the country's pipeline infrastructure in recent months, periodically halting Basrah Light crude exports out of the south.
• The northern pipeline connecting Iraq's Kirkuk oil fields to the Turkish terminal of Ceyhan has been the most vulnerable, limiting Kirkuk crude exports to 18 million barrels this year.
• The two export pipelines connecting the Rumaila and Zubair oilfields to the terminals of Basrah and Khor al-Amaya have pumped up to 2 million b/d to the two southern terminals.
• The imposition of a blackout on official information regarding the state of the oil sector is intended to prevent details on the state of repair of bombed pipelines from being useful to saboteurs.
• The increasing number of explosions on small or domestic pipelines connecting oil fields to gathering stations has added to the confusion, as the lack of authoritative comment from senior officials obscures their effect on exports.
• Market players are now looking at newswire reports and production and export numbers out of Iraq with considerable skepticism, and traders say even Iraq's official crude marketer, State Oil Marketing Organization (Somo), is reluctant to give out much detail on the state of export terminals or pipeline flows.

Statistics:

• 18 million barrels: Kirkuk crude exports this year.
• 1.7 million b/d to 1.8 million b/d: Basrah Light crude exports through the two export pipelines connecting the Rumaila and Zubair oilfields to the terminals of Basrah and Khor al-Amaya.
• 2 million b/d: Maximum capacity of the two export pipelines.
• 81 cents: Crude futures price increase on the week following news of pipeline attacks.
• $3.37 billion: Proposed allocation to beef up security and oil output.
• $18.4 billion: Congressional approval for reconstruction work in Iraq.

Sources:

• "We are not a normal country and we are not living in a normal situation," said a top Iraqi oil official, justifying the information crackdown.
• "Most of the time we take notice of the reports, but tend to discard them until we get the real picture from shipping agents," said a trader of Iraqi oil.
• "There's a pipeline explosion, but it's easily repaired, then it's just blown up again," said Bob Ebel, head of the energy program at the DC-based Center for Strategic and International Studies.
• "The situation is extremely volatile, but the market expects this," said Bob Ebel.