Iraq may build oil storage in Japan and South Korea

Iraq is studying the possibility of building crude oil storage facilities in South Korea and Japan as part of a plan to increase sales to Asian clients, the head of the Iraqi state-oil marketer SOMO, Alaa al-Yasiri, said yesterday. “SOMO’s new strategy is to form trade arms in Asian markets to maximise profits and boost crude shipments to Asian markets,” he told reporters in Baghdad.

SOMO received offers from Exxon Mobil, Total, Japan’s Sumitomo and China’s Unipec, to take part in marketing Iraqi crude, he said.

A worker walks at Rumaila oil field in Basra. Iraq plans to stop loading crude from its southern port of Basra for three to four days in early April due to maintenance.

“We are studying building crude storages in South Korea and also Japan and we’re also studying options to have partnership between SOMO and companies which are ready to help with building the storages,” Yasiri said. Iraq plans to stop loading crude from its southern port of Basra for three to four days in early April due to maintenance, he said. During the halt of loading operations at Basra port, Iraq will divert production to storage depots in south. Once the maintenance work is done, it will pump at maximum capacity to make up the shortfall.

Opec’s second-largest producer, after Saudi Arabia, Iraq exports most of its crude from the Basra region, on the Gulf. The Basra port loading capacity is estimated at around 1.8mn barrels per day (bpd). Iraq has 10mn barrels in oil storage capacity in the southern region, Yasiri said. Iraq’s crude output should not exceed 4.360mn barrels per day in compliance with a deal between oil exporting nations to curb supply in order to lift prices, he also said. March oil exports won’t exceed 3.426mn bpd, he said. Oil exports from the northern Kirkuk fields through Turkey, halted since October, could resume “at any moment” as talks with the Kurdistan Regional Government which controls the pipeline are ongoing, he said.

The main issue hindering the resumption of exports to Turkey is the Kurdistan region’s demand that the central government in Baghdad pays debt related to the development of the Kurdish oil industry infrastructure, he said. In parallel, the Iraqi government plans to build within six months a pipeline to Turkey that runs in territory under its control, he said, adding that 96 offers to construct the facility had been received. Iraq could start “in one to two weeks” sending crude by truck from Kirkuk to Iran’s Kermanshah refinery, starting at a daily average rate of 30,000 bpd, he said. The swap deal agreed at the end of 2017 between Tehran and Baghdad provides for Iran to export from its Kharg terminal, on the Gulf, on SOMO’s behalf, the same amount of crude it receives from Kirkuk.


Sources and photo-credits: Reuters, Gulf Times