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Iraq gears up for higher Basrah Medium sales with revamp at Basrah terminal: SOMO

Iraq expects exports of Basrah Medium to rise over the remainder of this year, with operations at the Basrah terminal being reconfigured to dedicate more capacity to the recently created crude grade, the State Oil Marketing Organization’s deputy director general, Ali al-Shatari, said Sept. 1.

State-owned Basrah Oil Co. is revamping the Basrah oil terminal, which has four loading arms for crude, to receive the Basrah Medium grade instead of Basrah Light. Basrah Light will be loaded from the single point mooring (SPM) that was previously used for Basrah Medium, Shatari told S&P Global Platts.

“Basrah Oil Co., which is responsible for oil terminals in the south, is doing some rehabilitation activities to […] increase the export capacity to the limit so they may match the expected increase [under the] OPEC+ agreement,” said Shatari.

SOMO introduced the Basrah Medium grade in January to address quality fluctuation issues with the country’s biggest crude stream, Basrah Light, arising from heavier crude fields coming online. The move essentially cut in half the volume of crude marketed as Basrah Light.

Since its launch Basrah Medium has proved popular with customers, and exports of the grade averaged 998,800 b/d in July, up 1.4% from a month earlier, according to SOMO figures.

Basrah Medium is now SOMO’s most popular export grade, especially in Asia, outpacing shipments of Basrah Light and Basrah Heavy, Shatari said.

“There are some new customers requesting new quantities [of Basrah Medium], but this cannot be considered within the year,” Shatari said. “It will be considered for next year’s allocations.”

The new customers are in Asia and Europe, he said, declining to be more specific. Currently nearly 80% of the Basrah Medium exports are shipped to the east, with China taking more than half and India as much as a quarter, he added.

“Demand [for Basrah Medium] is increasing in terms of variety of customers in Europe, but the demand is increasing in terms of variety and quantity in Asia,” Shatari said.

The grade has a specific gravity of around 27.9 API with a sulfur content of 3%, making it very similar in quality to Saudi Arabia’s Arab Heavy, which has a gravity of 27.8 API and 2.75% sulfur.

Quota easing

Iraq’s federal oil exports, excluding flows from the semi-autonomous Kurdistan region, are expected to rise to as much as 3.1 million b/d in September thanks to its higher OPEC+ quota, Shatari said.

Federal oil exports in August rose 4.7% to 3.054 million b/d in August from 2.918 million b/d in July, according to oil ministry data.

OPEC and its allies are gradually lifting production quotas in anticipation of higher global oil demand as the world emerges from the pandemic and Iraq’s quota is set to rise to 4.105 million b/d in September from 4.061 million b/d in August.

Iraq, which currently has an oil production capacity estimated at 5 million b/d, is one of five countries that negotiated at the July 18 OPEC+ meeting a higher baseline for its quota, which will rise from 4.653 million b/d through April 2022 to 4.803 million b/d from May 2022 onwards.

“For the time being, we have the ability [to export] with the increase that is already agreed by OPEC+,” said Shatari. “A number of measures need to be taken also over the year 2022 to have a spare export ability or capacity for further increase whenever the market needs or allows.”

Iraq needs to revamp its old sea lines to increase pumping rates as well as boost its storage capacity inland and expand it offshore, he added.

Currently the inland storage capacity is about 10 million barrels, which can cover a maximum of three days of production, he added.
Source: Platts

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