Al Majal Updates


The audience of Al Majal Logistics Services’ Facebook page surpassed 100,000 followers this month as the team continues to grow its outreach across customer segments by widening the range of products offered.


Qamar Energy’s Monthly Contribution


Latest in the Iraqi & Regional Energy Markets



New Lockdown measures came into effect as Iraq recorded its highest new CoVid-19 caseload of 4,181 as of February 23, with most of the new infections taking place in western Baghdad as well as the two shrine cities of Najaf and Karbala, marking a 600% increase from January 16’s low daily cases of 596. Iraqi authorities introduced overnight curfews starting February 18 from 8 pm until 5 am, with a full lockdown on Fridays, Saturdays and Sundays. The government blamed the new “UK strain” which emerged in England in December, considered more contagious than others. Meanwhile, the ministry doubled its testing from approximately 25,000 tests per day in the autumn to 49,000 currently. Travel to and from 20 countries[1] has been banned after the new strain of the coronavirus spread in these territories[2]. Daily deaths, meanwhile, have reduced by a remarkable ~78% from a high of 122 in June, with overall recovery reaching near 92%. Iraq has inked a preliminary deal with Pfizer-BioNtech for 1.5 million doses of the coronavirus vaccine to arrive in the early New Year, which should bolster domestic demand sentiment somewhat. Iraq’s National Medicine Selection authority granted the approval for emergency use of the vaccine on December 27, while it approved of China’s Sinopharm and Britain’s AstraZeneca on January 19. Iraqi Health Minister Hassan al-Tamimi announced that Iraq would receive 3 million doses of the vaccines by end-February. Vaccine passports may also be required for expat oil-field workers, once global vaccination levels have risen sufficiently.

Economic revival hinges on the country’s energy sector, where several high-profile developments have taken place in recent weeks. Oil exports in January decreased by 38 kb to 3.26 Mb/d, in line with its OPEC+ production quota. Despite the decline in exports, Iraq’s oil export revenues reached a 10-month high of US$ 4.739 B as the government’s average sale price rose to US$ 53.29/bbl in January, from just US$ 41.89/bbl in October. Yet, a draft 2021 budget, approved on December 22, sets a record deficit of US$ 43.4 B, raising concerns over how quickly energy plans could return support to the economy. This follows approval of the devaluation of the Iraqi Dinar by ~23% against the dollar to allow the government to generate more dinars from dollar-denominated oil sales. A potential downside is the likely increase in inflation, cost-of living expenses, and negative impact on contractors awaiting payment denominated in dinars.

A roundup of the latest developments in the Iraqi energy market is summarized in the table below.



Bearish market sentiment is expected to continue weighing on world oil demand outlook for the remainder of the year and into the first quarter of the New Year. A key contributor to the less-than-positive demand outlook is continued bearishness on road and transportation fuel demand in OECD Europe, now that various EU governments and some jurisdictions in the US have re-introduced curfews and partially or fully shutdown hospitality services, and with the emergence of more contagious Covid-19 strains. Non-OECD demand might improve slightly due to positive momentum from Q3/Q4 carrying forward in China, where industrial activity indicators and petrochemical activity have improved. The situation should improve after Q1 as vaccination becomes increasingly widespread and effective.
Overall Middle East demand is expected to contract by 380 kb/d in Q4 2020 from Q3 levels, with overall 2020 Middle East demand estimated to decline by 630 kb/d from 2019’s levels. Seasonality is expected to play a large part in demand reduction due to the winter season, especially in the UAE, Kuwait, Saudi Arabia, and Oman, as well as the continuation of social distancing measures, work and school from home, mobility restrictions, and travel restrictions on tourists and visitors from the EU, South Africa, and Australia, as a new coronavirus strain spreads. PMIs have stabilized, even though economic activity remains slow, reflected in lower diesel consumption. This has informed some noteworthy deals in the energy sector in recent weeks, summarized in the following table.



Top Energy Deals in the Region



Regional Rig Count (1): OPEC+ Pressure to Keep Iraq Rig Count Low



Source: Baker Hughes International Rig Count
Note: Iraqi gas rigs are not reported by Baker Hughes, likely because Iraq reports gas rig figures clubbed with oil rigs and/or lack of response from contractors (drilling for non-associated gas is at minimal levels compared to oil).
* End of Qamar Energy’s contribution, for more information about Qamar Energy, please visit www.qamarenergy.com


Iraq Oil Market Highlights



Iraq Coronavirus Cases Overview
Since the Beginning of the Outbreak


Iraq’s Oil & Gas News


Iraq has put on hold an oil supply deal with Chinese Zhenhua that featured an advance payment of several billion dollars as oil prices have risen over the past few couple of months.



Iraq’s Ministry of Oil has announced initial oil exports for January of 89 million barrels, giving an average for the month of 2.87 million barrels per day (bpd), up from the 2.85 million bpd exported in December.



The Dhi Qar Oil Company said that LITASCO will fund the Nasiriyah field project to increase production capacity from 100,000 to 200,000 barrels per day.



 Under the chairmanship of Prime Minister Mustafa Al-Kadhimi, the Iraqi Cabinet has agreed to authorise the Ministry of Health to purchase the coronavirus vaccine from Chinese company Sinopharm.



Iraq’s Minister of Oil, Ihsan Abdul Jabbar said his Ministry’s goal is to support the Ministry of Electricity to have 20 gigawatts of solar energy capacity installed by 2030.


Iraq’s Security Updates