It's a month-by-month bit of good news, albeit in small increments. But Iraqi production continues to move upward at a steady pace.

As Platts reported January 7, Iraqi oil production hit a nearly four-year high in December as average output reached 2.475 million b/d, up 73,000 b/d over November. Supply from both northern and southern fields rose. The figures came from the country's oil ministry.

The December figures brought total average Iraqi output for 2007 to 2.181 million b/d, a rise of 28,000 b/d over 2006. That's a relatively small gain, but most of the increases were posted in the latter half of the year, with December output running almost 300,000 b/d more than the average for the full year.

The actual figure is almost certainly higher. As Platts' Iraq correspondent Faleh al-Khayat reported, the country is still "suffering from the phenomenon of missing barrels that were neither exported, stored or fed into refineries, with 21.5 million barrels of crude unaccounted for last year. At an average 2007 oil price of $65/barrel, the loss in revenue is estimated at $1.4 billion in 2007."

That's bad news for the Iraqis, though the amount of missing oil last year was still said to be less than the 2006 figure of 44 million barrels. But for the world, even if it's smuggled out, it's still supply to meet demand.

Much of the increase has come from the northern part of the country. Average production in December from northern fields, including the giant Kirkuk field, was 536,000 b/d, 14,000 b/d more than in November and the highest since September 2004. Production from southern fields also rose to 1.939 million b/d, from 1.88 million b/d in November.

The rise in production from the north was attributed to the operation in 2007's third quarter of a major pipeline that links the production center of Kirkuk to the gathering and refining center of Baiji, which supplies local refineries and the Iraq-Turkey export lines. But improved security, patrolling and protection of the transfer and export pipelines inside Iraq also has been cited, as well as "a substantial fall in the number of insurgent attacks against production facilities, personnel and pipelines," according to Khayat's reporting.

In a year of flat to declining production in so many key oil producers -- Mexico, Venezuela, Ecuador -- the Iraqi turnaround in 2007 is a rare bright spot.

Posted by John Kingston on January 8, 2008