Tuesday 19 June 2018

Iraq to begin oil shipping

Baghdad, January 8, 2010

Iraq plans to begin crude oil shipping operations in March as it prepares to export larger volumes of crude in the future, the head of Iraq's State Oil Marketing Organisation said.

Iraq last year awarded contracts to foreign oil firms that would boost its output capacity to 12 million barrels per day (bpd) from 2.5 million bpd in 2017. Pumping and exporting the anticipated rise in output presents huge logistical challenges.

"We want to get familiar with this business for the future," Falah Alamri, head of Iraq's State Oil Marketing Organisation, told Reuters. "We have to prepare ourselves for when exports are three or four million barrels per day in a few years."    

To deliver the crude, Iraq would revive the Iraqi Oil Tanker Company (IOTC), Alamri said. The company would lease a tanker and begin crude deliveries in March or soon after, he added.

The IOTC, controlled by the ministry of oil, was set up in 1972 and at one time had about 20 tankers. The fleet was hit hard by the Iran-Iraq war and the 1991 Gulf War. During the Gulf War, four tankers were sunk off the Iraqi and Kuwaiti coasts and four others were vandalised and abandoned by crews.

Iraq planned a joint venture company to handle the shipping, Alamri said. He declined to give more details on possible partners for IOTC.

Iraq this week offered a rare spot crude cargo of Basra oil on a delivered basis to Asian clients, traders said on Wednesday.

It would be the first cargo to be delivered under the revived shipping operation, Alamri said. It was the first delivered cargo of Basra crude Iraq has offered since 2003, another source at SOMO said, the same year US-led forces invaded the country.

Since then crude has been offered only from export ports with buyers chartering vessels to collect the crude, in a purchase contract on terms known as free-on-board.

"We need both free on board and deliveries for the future," Alamri said.   

Top oil exporter Saudi Arabia and other regional producers such as Iran also use their own ships to deliver crude.

Foreign-owned vessels load from the offshore Basra terminal. They also load Iraqi Kirkuk crude from the Turkish port of Ceyhan, the terminal for a pipeline from Iraq's northern fields. 

Other sources said that Iraq was struggling to market Basra crude due to increased supply of similar grades of oil from other suppliers such as Russia. Most of Iraq's exports, around 1.5 million bpd, are through Basra. The country exported close to 2 million bpd in December. - Reuters

Tags: Iraq | oil shipping |

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