S&P: Iraq's SOMO excludes Basrah Light from 2022 crude allocations options

Shafaq News/ Iraq's State Oil Marketing Organization has asked customers to provide their 2022 term crude requirements for three crudes, excluding Basrah Light, according to Iraqi sources and traders, as the marketer focuses on its more popular Basrah grades.

Customers were asked to submit their requirements for Basrah Medium, Basrah Heavy and Kirkuk by Oct. 30.

"Basrah Light will be dedicated for local consumption due to our refineries' requirements," one Iraqi source told S&P Global Patts.

Basrah Medium has become SOMO's most popular grade, particularly in Asia, after it was split from Basrah Light 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.

Basrah Medium exports in September rose 4.6% to 1.151 million b/d, Basrah Heavy fell 0.4% to 1.018 million b/d and Basrah Light fell 3.5% to 806,000 b/d.

Basrah Medium 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.

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, SOMO'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.

"Most of the refineries don't like Basrah Light," said a trader with a North Asian refinery "They are managing with substitutes for Basrah Light. Refineries prefer Basrah Medium better so maybe (there will be) more exports."

Many traders were surprised by SOMO's move to remove Basrah Light from the crude allocations' options.

Basrah Light "sounds too big to digest in the system. I don't think their system refinery needs so many [different grades]," said another trader.

Other traders expect SOMO to blend Basrah Light with Basrah Medium

"I heard SOMO planning to keep Basrah Light for their system refineries but allocate more Basrah Medium and Basrah Heavy to export, that would be tough for term lifters," a third trader said.

"My guess will be more Basrah Light will be injected into Basrah Medium and [could make Basrah Medium] lighter and sweeter."

(S&P)