January 26, 2012 / 11:21 AM / 8 years ago

Iraq expects to open new oil terminal in 10 days

BAGHDAD (Reuters) - Iraq expects to start oil exports from a new Gulf terminal in 10 days after delaying its ceremonial inauguration to finish pipeline connections and testing, Iraqi oil sources said.

Iraq’s oil minister said last week test-pumping of crude through the new single-point mooring (SPM) would begin on Wednesday, and the terminal would be ready to receive vessels in February.

The OPEC producer’s new terminal will add about 900,000 barrels per day to its export capacity, coinciding with a Western embargo on Iranian oil that could put pressure on global supplies.

But hydrostatic testing of both the onshore and offshore sections of new pipelines to the terminal has not been completed, a South Oil Company source said.

“We have to complete the test on both parts of the pipeline and only then will we be able to connect the onshore pipeline with the offshore part. We need around 10 days to complete all the work,” said the source, who is a member of Iraq’s southern export expansion team.

Iraq’s $1.3 billion export expansion project in the Gulf includes two undersea pipelines and one onshore pipeline, as well as four SPMs for loading tankers.

Each new SPM will add about 900,000 bpd to Iraq’s export capacity. Two other SPMs will be brought on line later in the year, Iraqi officials have said.

Export capacity limitations have hampered Iraq’s ambitious goal to vault into the ranks of the world’s top crude producers.

Baghdad has awarded a series of development contracts to foreign majors such as Shell, Exxon Mobil and BP, targeting output capacity of 12 million bpd by 2017. Most analysts see 6 million to 7 million bpd as a more realistic goal.

An oil ministry statement on Wednesday announced the delay of the first SPM’s inauguration until further notice but did not give any details. The event had been scheduled for Friday.

“We had bad weather in the Gulf at the start of this week that helped delay the work to complete the offshore part of the pipeline. We expect to start pumping crude through the terminal in the coming days,” Oil Ministry spokesman Asim Jihad said.

Another official at state-run South Oil blamed “technical reasons” and the delay of a vessel scheduled to berth to carry crude from the terminal. “We need about 10 days to complete all technical details,” the SOC official said.

Iraq is currently producing close to 3 million bpd while exports averaged 2.165 million bpd last year, according to the State Oil Market Organisation.

Exports are expected to average 2.5 million bpd this year.

Bringing the first three SPMs on line would boost Iraq’s export capacity in the Gulf by 2.7 million bpd, more than doubling Basra’s current capacity. Its two current Gulf terminals can handle around 1.7 million bpd.

Iraq also has plans in place to build a third Gulf pipeline and a fourth SPM, while a fifth SPM is on its wish list.

Additional reporting by Aref Mohammed in Basra; editing by Jim Loney

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