Iraqi oil exports increased last week, prompting a seasoned observer to tell MEES that Basrah crude loadings are beginning to look “like a real program” after seven weeks of disruption.
One reason behind the higher exports is the decision by the Iraqi Government to reduce the surcharge on exports it wants paid into an account outside UN control.
Another is that super major international oil firms are now arguing that since the UN has approved both the price formulas and the contracts signed by primary lifters, there is no reason for them not to buy the oil from primary lifters, especially since there is no evidence that a surcharge is being paid.
A further reason could be the fact that major consuming countries are turning a blind eye to Iraq’s efforts to impose the surcharge, perhaps because Iraqi oil supplies are needed in order to help bring world oil prices down and the revenue generated by the surcharge is small compared to that from the cross-border oil trade with Turkey, Jordan, Syria and the Gulf – which also goes to independent accounts outside the control of the UN.
MEES learns that Iraqi oil exports under the oil-for-food program total around 1.17mn b/d in January, compared to around 600,000 b/d in December.
The January exports are broken down as follows: 17 loadings from Mina al-Bakr (eight VLCCs from 1-23 January and nine others from 24-31 January) for a total of 30.6mn barrels; and five loadings from Ceyhan (three vessels – one of them a VLCC taken by Bayoil to the US – have already loaded, and another two are scheduled to load between 27 and 31 January) for a total of 5.8mn barrels.
MEES also learns that the Iraqi Government decided on 18 January to change the surcharge from a flat 40 cents/B to the following: 25 cents/B for Kirkuk and Basrah light crudes to Europe; 25 cents/B for Basrah Light to the Far East; and 30 cents/B for Kirkuk and Basrah Light to the US, all retroactive to 1 December.
It is further understood that certain primary buyers (both companies and countries) are not paying the full surcharge, or even any surcharge at all, and are therefore asking for lower premiums from end-users.
However, it cannot have escaped the notice of traders and international oil companies that ExxonMobil, BP and Texaco have taken the initiative to acquire Iraqi oil through third parties, opening the way for several American and European firms either to do the same or to review their earlier positions.
Nonetheless, several major international firms are still shying away from Iraqi oil, including Shell, TotalFinaElf, Chevron and Japanese oil firms.
Several interesting developments have accompanied the latest twist in the Iraqi oil saga. First, there is an uncommonly keen interest in Kirkuk sales to the US.
Furthermore, it is understood that SOMO, surprised by the very low liftings of Kirkuk during the past seven weeks, is now forcing some buyers to lift Kirkuk along with their purchases of Basrah Light, and as a result there is already a sizeable schedule for liftings of Kirkuk by major trading companies during early February. Second, oil is being traded among several companies before reaching its final destination.
For example, Machinoimport purchased 1mn barrels of Kirkuk which it sold to Petraco which in turn sold it to ExxonMobil; Italtech bought 2mn barrels of Kirkuk and sold to Bayoil, which took it to the US; and Slavneft sold 1mn barrels of Kirkuk to Glencore, which sold it on to Morocco’s Samir.
Finally, there has been an increase in the number of barter oil deals – which can be used to conceal the exact level of the surcharges – with firms from India, Malaysia, Belarus and Vietnam.
(mees)
© 2001 Mena Report (www.menareport.com)
