Iraq oil tensions ripple across Singapore’s industries: OCBC

Refiners, utilities and transportation, watch out.

The geopolitical tensions in Iraq are severely affecting oil production growth, and Singapore companies should keep an eye out in case the crisis refuses to be contained.

A report by OCBC unraveled some companies which may benefit from higher oil prices, namely rig builders Keppel Corp and Sembcorp Marine, E&P companies such as KrisEnergy and RH
Petrogas, service and equipment providers such as Ezra, Swiber, Ezion, Mermaid Maritime, Pacific Radiance, POSH, MTQ, Mencast and Kim Heng Offshore & Marine.

It should be considered, however, that companies who derive a substantial amount of their earnings from Iraq will be the ones severely affected. OCBC found no such companies listed on the SGX, but found that there are some overseas-listed companies that derive at least 10% of their revenues from Iran and Iraq: Genel Energy, Termbray Petro-King Oilfield Services, DNO
ASA, Gulf Keystone Petroleum, and Japan Drilling.

Meanwhile, downstream players such as the refiners will be negatively impacted. As crude oil is a feedstock for refineries, higher crude prices will mean higher input costs. With PetroChina buying out SPC in 2009, there is currently no refinery listed on the SGX. However, overseas refiners and petrochem names would include Indian Oil, SK Innovation, Thai Oil, PTT Global Chemical, Esso Thailand and Chandra Asri.

Here’s more from the report:

So far, the conflict has been limited to Northern and Western Iraq, and the insurgents have attacked Iraq’s biggest oil refinery in Baiji (though latest reports say it has been recaptured by the Iraqi government).

Should the unrest spread further down south to where most of Iraq’s current producing and exporting oil fields are located, we should see a greater impact on oil prices.

Iraq’s oil supply at Jun 2012 shows daily production at an average of 3m bbl/day. During this period around 670,000 barrels per day (b/d) were delivered to domestic refineries, around 70k b/d were used directly for power generation and over 2.4m b/d were exported. Most of the export flows were made by tanker through offshore terminals and mooring systems in the south, but a smaller share was exported via the northern pipeline to the Turkish Mediterranean port of Ceyhan.