by David Bird

15-08-08 The US got more crude oil from Iraq than Alaska in June as imports from OPEC continued to top domestic production. A review of US data shows that in 17 of 18 months dating to January 2007, crude-oil imports from the Organization of Petroleum Exporting Countries exceeded US production levels.
The figures shine a spotlight on the main points of the long-overdue debate over energy policy in the world's biggest oil consumer.

The Bush administration wants to open up coastal waters to oil drilling again, and Democratic leaders are willing to consider it, with some restrictions. The new data, though, also help puncture a popular political myth that the US can gain energy independence, even in the long run, despite the sloganeering of the current presidential campaign season.
"It might be pleasing to the audience" to hear such pledges, but "energy independence is not a logical goal. It is never going to happen," said Robert Ebel, a senior energy analyst at the Centre for Strategic and International Studies in Washington, DC. The US accounts for nearly a quarter of world oil demand and holds just a fraction of global reserves.

With most of the world's oil reserves lying under the sands of the volatile Middle East, where political disputes sparked global oil-price shocks, cutting dependency has been a table-thumping theme well before oil prices tripled in recent years to a record high near $ 150 a barrel in July.
But with domestic output and production from non-OPEC producers failing to keep pace with rising demand from the developing world, US reliance on OPEC and Middle East imports has climbed along with prices. What's more, the higher reliance on imported oil has come as US oil demand has slumped under the weight of high prices.

Saudis pump up the volume
US President George W. Bush twice this year directly lobbied Saudi King Abdullah for increased oil supplies. Only after prices surged further did the king agree to push output to 9.7 mm bpd, the highest level since 1981. Lost amid the scramble to try to cap gasoline prices from rising much above $ 4 a barrel was yet another pledge to cut dependence on Middle East oil.
Data from the Energy Information Administration show that US crude-oil imports from Iraq in June averaged 693,000 bpd, topping Alaska North Slope output of 667,000 bpd. For the first six months, US imports of Iraqi crude are up 42 %, giving Iraq a 6.9 % share of US crude imports, compared with 4.7 % in the first half a year ago. That's the biggest percentage share for the first half of any year since 2002.

The 674,000 bpd volume was the most for the period since 1999. Back then, under Saddam Hussein, Iraq was exporting limited volumes of crude under the UN oil-for-food program, which has since been shown to have been abused to enrich the Iraqi regime.
The jump in Iraqi imports may continue, as Iraq's State Oil Marketing Organization said it aims to surpass the May post-war record of exports of 2.11 mm bpd in the second-half of 2008, with average exports of 2.14 mm bpd. Along with Iraq, crude-oil imports from Saudi Arabia, the world's largest oil exporter, rose 8.2 % from a year earlier in the first half of 2008.

Imports from Saudi Arabia of 1.523 mm bpd in the first half were the strongest for the period since 2005. US imports of crude oil from all Persian Gulf suppliers jumped to 24.8 % of total imports in the first half from 20.7 % in the year-earlier period and marked the highest first-half share since 2003.
Back then, ironically, imports from Iraq surged to nearly 1 mm bpd a month before the March 2003 invasion and May 2003, with Iraqi flows essentially crippled, imports from Saudi Arabia hit a record level of 2.24 mm bpd.

OPEC flow tops US output
EIA data show US oil output in the first half of 2008 was virtually flat with the year-ago period, at 5.13 mm bpd. But US imports from all OPEC members have climbed 3.9 % to average 5.56 mm bpd. The gap between domestic output and US imports of OPEC crude doubled in the first half, compared with the 2007 period, to more than 425,000 bpd.
The sharp gain came even as Venezuela, the fourth-biggest supplier to the US, cut off sales to ExxonMobil in February in a dispute over nationalization of resources. Venezuela's exports to the US fell 8.9 % from a year earlier in the first half 2008. Between January 2007 and June 2008, US imports from OPEC topped domestic production in 17 of 18 months, by an average of more than 350,000 bpd.

The figure speaks to declines in US output but also to inclusion of oil imports from Angola and Ecuador to the OPEC side of the ledger, from the start of 2007 and 2008, respectively. But even excluding Angola, imports from OPEC exceeded domestic output in three months of 2007.
With new output from an Exxon project, Angola's production output has topped 2 mm bpd, dethroning Nigeria as Africa's biggest oil producer. US crude imports from Angola, at 636,000 bpd in June, were the most since May 2007. But first-half imports from Angola lagged behind the year-earlier period by 12.7 %, as the country emerged as major supplier to China, the world's second-biggest and one of the world's fastest-growing oil consumers.

Mexico's volumes slump
EIA data show that since 2003, non-OPEC supplies have lagged behind growth in global oil demand, and that trend is expected to continue through 2009. This year, global demand is expected to rise by 780,000 bpd, nine times greater than the expected rise of 90,000 bpd in non-OPEC supply.
EIA expects US demand to drop 480,000 bpd, while Mexico, the No. 3 crude-oil supplier to the US, warned the steep decline in its oil output will deepen next year.

With a 20 % drop since 2004, state oil company Pemex has failed on its goal of holding output at 3 mm bpd, due to the decline of its huge Cantarell field. Mexico's output, seen at 2.85 mm bpd this year, is expected to drop to 2.7 mm-2.8 mm bpd next year. US imports of Mexican crude have fallen 18 % in the first half compared with the year-ago period.
New deepwater projects in the US Gulf will modestly lift output in coming years and alternative fuel use and vehicle-mileage improvements will shave 2 mm barrels from US demand by 2030, EIA projects. But by then, US dependence on imports of crude oil and petroleum products only will shrink to 54 % of daily needs from 60 % now, EIA said.

David Bird, senior energy correspondent for Dow Jones Newswires, has covered global oil markets for more than 20 years.