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Batch of contaminated Iraqi fuel oil sparks fresh quality concerns

Iraq’s Oil Marketing Company (SOMO) sold a batch of fuel oil in recent weeks that was contaminated by a chemical cleaning agent, five trade sources told Reuters on Wednesday.

About 600,000 to 700,000 tonnes of high-sulphur straight-run fuel oil (HSSR) supplied to SOMO’s term customers were affected, three of the sources said.

The fuel oil contained chlorinated organic compounds (COC) ranging between 90 and 130 parts per million (ppm), they added.

SOMO did not immediately respond to a request for comment.

HSSR is typically purchased by refiners for further processing at secondary refining units to produce better quality oil products.

The maximum COC content for fuel oil feedstock at refineries is at 5 ppm and higher levels can cause damage to processing units, one of the sources said.

This is the latest incident in a spate of contaminated fuel cases that have emerged this year. In March-April, contaminated fuel caused ships to malfunction at the world’s largest bunkering port Singapore.

“The HSSR goes to (refinery) feed so there is no impact on bunkers,” said another of the sources, but he added it would still take time for the incident to be fully resolved.

The impact on prices had been limited so far as there is plenty of supplies, the first source said.

Spot fuel oil premiums have been little changed in recent weeks, despite the quality issues, as the high-sulphur fuel oil (HSFO) market remains awash with supply.
Source: Reuters (Reporting by Florence Tan and Jeslyn Lerh in Singapore; Additional reporting by Maha El Dahan in Dubai Editing by Mark Potter)

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