Iraq February Oil Exports Hit Post-2003 High – SOMO

By Hassan Hafidh

Published March 01, 2011

| Dow Jones Newswires

AMMAN -(Dow Jones)- Iraq’s oil exports rose to 2.202 million barrels a day in February, the highest rate reached since the U.S.-led invasion in 2003, the head of the state oil marketing company SOMO said Tuesday, and the country’s top oil officials said output should hit 3 million barrels a day by the end of the year.

Falah Alamri also said Iraq sold its crude oil at an average $97-$98 a barrel in February, compared with an average $90.78 a barrel in the previous month. That means Iraq would earn some $6 billion-$6.042 billion, he said. In January Iraq earned some $6.082 billion, the highest in a year.

Alamri said there was an increase in February’s oil movements from fields in northern Iraq due to the resumption of exports from the semi-autonomous Kurdish region. Some 494,000 barrels a day were exported from Kirkuk and Kurdish oil fields in February, compared with 419,000 barrels a day in January.

The Kurdistan region resumed oil exports in February after a one-and-a-half year suspension at just shy of 10,000 barrels a day and the flow is now between 60,000 and 70,000 barrels a day, Iraqi oil officials said. Kurdish officials had said they could lift output from their fields to up to 200,000 barrels a day by the end of this year.

Alamri said some 1.708 million barrels a day were exported in February from southern terminals in the Basra ports, compared with 1.742 million barrels a day in the previous month, with the slight fall attributed to a shorter month.

The total export increase has come in-line with swift work at the southern Rumaila, Zubair and West Qurna Phase 1 fields, where some 300,000 barrels a day have been already been added. A further 200,000 barrels a day from southern oil fields are expected by the end of this year to bring Iraq’s total output to 3 million barrels a day, according to Iraqi Oil Minister Abdul Kareem Luaiby and Deputy Prime Minister for Energy Affairs Hussein al-Shahristani.

Copyright © 2011 Dow Jones Newswires

How Iraq can build a robust economy


How Iraq can build a robust economy
Sunday, March 6, 2011

The big idea: The unmet challenge of economic development lies at the heart of our world’s most pressing social issues.

The scenario: Thinking about growth may seem a luxury in Iraq, a nation beset by war and deep in the throes of political change, but the path to rising living standards runs directly through how firms, large and small, domestic and foreign, play a constructive role in rebuilding the Iraqi economy.

For most MBAs, the phrase ‘global business opportunity’ conjures China or India, but most of the tough challenges faced by firms occur in places more like Iraq than in the BRIC economies. In nations like Iraq, one can readily appreciate the foundations of economic growth and productive commercial activity, largely by their absence. So, how can firms and their managers best create jobs and incomes for Iraqi people in the long run?

One irony of development is what economists call the ‘resource curse.’ Countries with abundant, extractable, nonrenewable resources such as oil and gas too often are dependent on that single economic sector. They lack competitiveness in other sectors. Power is entrenched in controlling the vital sector. And that power is wielded in ways that strangle internal investment and productive risk taking. Consequently, the incentives to build human capital and to create new firms to challenge incumbents or serve new markets are weak. Such are the conditions in Iraq.

The resolution: While efforts are underway to create a more diversified economy, the nation must channel its natural resource abundance into economically and socially valuable institutional change. The heart of the Iraqi economy is oil, which represents more than 90 percent of all exports from Iraq and generates 70 percent of GDP. Iraq has the fourth-largest proven oil reserves in the world -115 billion barrels – though this estimate is decades old. Many believe that Iraq may have at least another 100 billion barrels of reserve. Yet, Iraq’s volume of oil exports rank only 14th or so worldwide. Sagging infrastructure, inadequate electricity supplies and lack of investment constrain field development and the generation of revenue and jobs that could spark more rapid growth. Iraq exported just over 1.9 million barrels of crude oil a day in 2010, or 23 barrels annually per person – well under its target of 25 to 30 barrels.

The lesson: The financial capital needed to increase export capacity is critical to fund what is most needed in Iraq: infrastructure services, schools, hospitals and better housing. But what can lead Iraq’s economy toward robust and sustainable growth? Macroeconomic stability, a precondition of growth, is emerging. Inflation is in single digits, and the Iraqi dinar’s crawling peg to the U.S. dollar has delivered steadiness to the banking and price systems.

Still, challenges persist. More than 40 percent of the population is under age 14. Male life expectancy is over 60. High jobless rates and a limited role for women in the labor force mean that big production increases are unlikely. Security concerns and an inchoate democracy make the risk of investments high. But the economy has improved and, at times, grown rapidly in recent years.

The future of Iraq’s economy can be bettered through greater commitments to economically productive institutions and by firms willing to invest wisely while the future remains highly uncertain.

– Peter L. Rodriguez

Rodriguez is associate professor of business administration, associate dean for international affairs, and director of the Center for Global Initiatives at the Darden School of Business at the University of Virginia.