The Arab Spring – Impact on Oil Production

  • Oil production has fallen by over 2 million barrels per day in five MENA countries (Libya, Syria, Yemen, Tunisia and Sudan) affected by violence stemming from the Arab Spring that began with riots in Tunisia in December 2010.
  • The loss of this production has had surprising little effect on international oil markets. Syria, Yemen and Tunisia were never significant exporters and the loss of production in those countries is a simple loss of energy supplies to the indigenous populations. The loss of Libyan and Sudanese exports has likely been cancelled by increased production in N America.
  • Oil production in Egypt has not been affected by the uprising in that country.
  • Wikipedia give a good account of the history of the Arab Spring. With thousands dead, chaos and suffering spreading across a vast region, it would seem more appropriate to rename this uprising the Arab Winter.

Figure 1 Production stack for 5 oil producing countries affected by the Arab Spring. The initial impact and subsequent partial recovery is plane to see. However, not widely reported in the mainstream media is the fact that production in Libya and S Sudan has once again been disrupted by new outbreaks of violence. Pre-Arab Spring, production from these countries was over 3 million bpd. This had fallen to 0.955 million bpd in September 2013. All charts are based on data reported by the EIA, latest data updated to September 2013.

Figure 2 Libya Libyan oil production recovered strongly following the civil war but never regained the pre war production level. Not so easy to see on this chart is that by September 2013 production was once again down to 390,000 bpd. The IEA reported production of 220,000 bpd for November. The cause of recent falls is growing unrest between tribal factions and the central government that has closed oil terminals. Most recent news is that production is now back over 600,000 bpd. Recent unrest has also impacted Libyan gas exports to Europe.

Figure 3 Egypt Egypt’s oil production has not been affected by the troubles in that country. But it needs to be noted that C+C production has fallen from 900,000 bpd in 1994 to 534,000 bpd in September 2013. According to the EIA, Egypt exported 85,000 bpd crude oil in 2010 and 90,050 bpd of refined petroleum products. In the same year Egypt imported 48,740 bpd of crude oil and 164,248 bpd of refined products yielding a small net import balance of 37,938 bpd. In 2006 Egypt exported 52,334 bpd of crude oil and 102,828 bpd of refined products whilst importing 71,000 bpd of crude oil and 75,206 bpd of refined products giving a small export balance of 8,956 bpd. The country has a rapidly growing population that it cannot support and is dependent on food imports that need to be paid for somehow.

Figure 4 Tunisia With production < 100,000 bpd, Tunisia is an oil production minnow, dependent I believe on foreign investment and expertise to maintain this trickle. The Arab Spring began in Tunisia in December 2010 and, like Egypt, did not have a major impact on oil production although production decline has accelerated since. As a working theory, I imagine that foreign participation in Tunisia may have been reigned in resulting in accelerated decline of the industry.

Figure 5 Sudan & S Sudan I simply do not know enough about Sudan to provide any form of reliable commentary and let the oil production figures speak for themselves. Oil resources are concentrated in the South of this recently partitioned country. Most recent reports are that oil production has been halted by regional violence.

Figure 6 Syria The impact of the civil war on Syrian oil production is plane to see. The IEA report production of 30,000 bpd in November 2013.  The EIA report Syria exporting 152,412 bpd crude oil in 2010 but importing 104,833 bpd refined products. It seems likely that Syria has been more or less self sufficient in oil prior to the civil war. The loss of this production is a loss to the Syrian people whom I presume are living in abject energy poverty.

Figure 7 Yemen Oil production in Yemen was in steady decline since 2000. The onset of the Arab Spring appears to have accelerated declines in a manner similar to Tunisia. The IEA reports production of 140,000 bpd in November 2013. According to the EIA, Yemen imported 59,051 bpd refined products in 2010 with zero crude oil imports. In the same year Yemen exported 14,329 bpd refined products and 175,176 bpd crude oil. Yemen, therefore has been a small net exporter but one can only assume that exports have now fallen to zero starving The State and the people of a vital revenue stream.

The six countries investigated here represent a small part of spreading violence throughout the MENA region. While Iran, a non-Arab country, is taking steps to come in from the cold, new unrest in Iraq linked to al-Qaeda must give cause for concern in the oil rich gulf states and the OECD that are dependent upon their oil exports. In 2004, an al-Qaeda attack on the massive Abqaiq oil processing facility in Saudi Arabia went barely noticed by the mainstream media but serves to demonstrate the vulnerability of Gulf oil production.

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10 Responses to The Arab Spring – Impact on Oil Production

  1. Nigel Wakefield says:

    I believe the problem in Sudan is more transportation-related than due to production problems, South Sudan owns the producing fields but all the pipelines to seaports go via Sudan, which (naturally) wants to increase the price for transporting crude to make up the revenue shortfall caused by the secession of South Sudan and its oilfields… Sudan has very close ties with China, so it’s hard to see the West trying to muscle them into relaxing their demands..

    I don’t think it’s a coincidence that US oil companies have recently become so interested in Uganda (and the US government so interested in finding and getting rid of the local warlord Joseph Koni of the LRA). As the crow flies, the shortest pipline route for South Sudanese oil would be via Uganda and Kenya to the Kenyan Indian Ocean coastline….

  2. Ed Reed says:

    South Sudan’s stoppages are not really a manifestation of the Arab Spring. On independence it took 75% of the oil production – so Sudan still has around 110,000 bpd – but flows from the south broke down on a number of disagreements, including how much tariffs should be and allegations of theft.

    Recent fighting in South Sudan is also not Arab Spring related, in that it is not a populist demand for democracy or better living conditions but rather a power struggle between President Kiir and the former vice president, Machar. There have, though, been some popular protests in Khartoum against al-Bashir’s government, following fuel price increases.

    There’s been talk about building a pipeline from South Sudan’s fields to Kenya’s coast, and linking up with production from Uganda, but construction costs on the pipes running to the north have not yet been paid off and it is hard to imagine many people queueing up to back it, particularly with the internal power squabbles breaking out into actual violence. Kiir and al-Bashir seem to be getting on better recently so if Machar sticks to the recently negotiated ceasefire, exports through the north would be sensible.

  3. wadosy says:

    has anybody figured out the max available capacity of pipelines bypassing hormuz?

    there’s supposedly 17 million barrels a day going through there in tankers… so how much would bet bottled up in the persian gulf when hormuz closes?

    one of the bypass pipelines crosses saudi arabia to the red sea, so whichever way it goes, it’s still got to go through a chokepoint… either the bab el mandeb or suez

    i guess if you want war with iran, that information shouldnt be put out there… so it gets kinda political, doesnt it?

    • Euan Mearns says:

      Iraq has one pipeline that goes N through Turkey and ends up at Ceyhan on the Mediterranean coast. The Kurds have just opened a new pipeline that follows same route – which is a flash point between Kurdistan and Iraq. As you mention, Saudi has a pipeline that goes west to Red Sea. But the real concern from spreading civil disorder are attacks upon onshore facilities – which are well guarded in Saudi.

      • wadosy says:

        so we’re not to worry about hormuz closing?

        the logic of that doesnt seem very sound… the US has boxed israel in on the iran deal, so now it’s obvious to everyone where the push to war is coming from

        looks to me like, if israel is sucessful in driving the US into war with iran, iran will do all it can to close hormuz… just to drive the point home: “israel is responsible for your ten dollar gas, so quit bitching at us”

        tony hayward and nat rothschild have formed genel, which is supposedly the biggest oil producer in kurdistan (according tot he sunday times… so that’s pretty saky) and that’s their pipeline that’s just been completed

        up until now, the way i understand it, kurdsl oil has been trucked to ceyhan

        it’s such a mess, but the neocon plan to fragment iraq seems to still be in effect… exxon gave up some holding in the south of iraq to concentrate on kurdish oil… doesnt look good for iraq at all, not with dozens of people being killed every day

        so i guess hayward, rothschild and exxon are betiting on the formation of an independent kurdistan… on the theory that it will be peaceful enough to produce the oil pipeline it through turkey

      • wadosy says:

        and now it looks like they’re trying to crank up the regime change project in syria again… that makes a certain amount of sense if they intend to re-establish those old pipelines through syria, lebanon and israel…

        that’s apparently why saudi has joined israel in agitating for war with iran… they want to close hormuz to force the oil to the mediterranean, thus bypassing all those chokepoints and eliminating VLCC trips around africa… but a friendly regime has to be established in syria first

        looks to me like the european/US big wheels know that the fracking bubble wont last long, and they’ll become more dependent on middle east oil

        • Euan Mearns says:

          Thanks for this perspective. I’m guessing you are in the USA (?) where the version of propaganda on the MSM regarding Middle east tends to be totally different to that dolled out in Europe. Not saying that Hormuz is not important and always at risk, its just that an Iranian, Israel, US war is not on my radar right now. Spreading unrest throughout Syria and Iraq is and this could spread to Saudi.

          If “we” were to go into Syria – which side would we go in on? Assad or al Qaeda?

          The semi autonomous region of Kurdistan within Iraq is an intriguing development. I have a few bets on there via small UK and Canadian listed oil cos, some of whom have found vast amounts of oil. Getting it out is the problem. Kurdistan was meant to develop its oil resources under the umbrella of the Iraqi government but has instead decided to go it alone and has not been receiving the oil revenue it is due from the centre. The central government really seems to have messed up getting OECD IOCs involved. Exxon decided the odds looked better in Kurdistan. Given the history, and Exxon, Total, Marathon, Genel are all involved in Kurdistan, I’m betting on Europe / USA offering the Kurds protection. My reading of the tea leaves is that Kurdistan is fast tracking 1 to 2 million bpd production and will then seek independence from Iraq. This causes all sorts of regional problems, including with Turkey and Iran who have large Kurdish populations. But the prospect of 2 to 5 million bpd piped safely through Turkey to Ceyhan will have big pulling power.

          • wadosy says:

            ust looks to me like hormuz is the scariest weapon iran has because nobody’s been able to manufacture convincing evidence of iran’s nuke weapons

            so if they’re attacked, they’lll use their best weapon


            exxon is allied with the neocons of the AEI in denying global warming and peak oil… they are allied with israel

            the AEI guys intend to establish “benevolent global hegemony” by killing nayone who resists their benevolence… but apparently obama’s backing off from those ambitions, and this deal with iran is evidence of that

            but the israel lobby is doing its best to impose more sanctions despite the deal, and more sanctions will wreck the deal, which points to war, which points to closure of homuz… assuming israel eventually prevails… they seem to be losing som juice…

            but they’ve established a legend though, for an iranian nuke attack on israel or the US… iran getting nukes from north korea

            (and you always wondered what determined the makeup of the original “axis of evil”, didnt you?)

            anyhow, fragmenting syria and iraq,has always been pretty high on israel’s list of priorities

            so it all sort of hangs together until you get to imposing your hegemony on china…

  4. wadosy says:

    we were trained to think the unthinkable… it’s a hard habit to break

    but there’s something else at work, here… the theory being, if you predict the worst thing you can think of, it wont happen

    the ten or twelve years, though, that theory has broken down

    reality always turns out to be worse than my worst expectations

    keep us posted on scotland… sounds like a good place to sell arms… until scots kill enough of each other that we can justify humanitarian intervention and grab our oil

    the empire in action

    hoorah hoorah

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