Iraq ... pacifying crude buyers
Iraq sets bigger discount for heavy Basra crude exports
SINGAPORE, December 11, 2014
Iraq will give a bigger discount for heavy crude that it exports from its southern ports in Basra next year, three sources with knowledge of the matter said.
The move is aimed at pacifying Iraqi crude buyers who have had to deal with varying quality of Basra Light after Iraq blended production of heavier oil from new fields with existing supply.
Basra's quality swings from a heavy oil with API gravity at 26 degrees to a medium type at 34 degrees, traders said. API gravity is used to compare the relative densities of oil.
The discount, also known as a de-escalation factor, is set at 60 cents a barrel for every API degree below 27, they said.
This will come into effect from January 1, 2015, one source said.
A de-escalation factor of 40 cents per API is already in place for Basra crude with an API below 34 degrees, the sources said.
Iraq's State Oil Marketing Organization (Somo) proposed in October splitting Basra Light into two grades, light and heavy.
The plan has been delayed to next year as some buyers were not ready to lift heavy oil, traders said.
--Reuters
