RIYADH, Sept 8: Iraq’s crude export to refineries in Asia is on rise. Traders such as Japan’s Mitsubishi Corp and China’s Sinochem International Company may ship more than 200,000 barrels a day of Iraq’s Basrah Light Crude worth $500 million to refineries in Asia in the last quarter of the year, industry reports confirm.
Refiners in Japan, Taiwan and India appear ready to use Basrah Light regularly provided the Iraq’s State Oil Marketing Company (SOMO) is ready to fulfil recent supply contracts.
“There is a possibility once exports are normalized, volumes to Japan or the Far East will increase,” Yoshinobu Satomi, assistant general manager of the crude oil trading at Tokyo based Mitsubishi Corporation, which has a contract to buy Iraqi oil, was quoted by Bloomberg as saying. Japanese refiners and traders were not allowed to trade directly with Iraq after the 1991 Gulf War because of sanctions. Now they are reportedly renewing links with SOMO.
Sales of Basrah Light which competes against Arabian Light Crude have reportedly picked up because of the price factor. SOMO has been selling the Basrah Light for September at 60 cents a barrel less than the Saudi Aramco’s Arabian Light Crude.
Some refiners in Asia, including India’s Hindustan Petroleum Corporation, Indian Oil Corporation, Reliance Industries Ltd and Bharat Petroleum Corporation, are already buying Basrah Light directly from SOMO. Japan’s Itochu Corporation is among the traders that are buying Iraqi oil for resale to the Asian refiners.
Mitsubishi, Japan’s largest trading company, recently sold Basrah Light cargoes for October loading to two refiners in Japan. Chinese trader Sinochem was reported to have sold as much as four million barrels of Iraqi oil to Taiwan’s state-owned Chinese Petroleum Corporation for deliveries in October and November. Basrah Light was last sold to Taiwan in March, traders were quoted as saying by the industry press.
ChevronTexaco and Royal Dutch/Shell may also ship oil bought under contract from Iraq to their refineries in Singapore and the Philippines, traders were quoted assaying by Bloomberg.
Basrah Light seems to be gaining popularity in Asia as winter approaches in the northeast because of its higher yield of gas oil and kerosene, which are mainly used for truck fuel and heating in Asia. Basrah Light has recently become mightier because SOMO no longer adds surplus fuel oil from its refineries to the oil. Its gravity, as defined by American Petroleum Institute, has reportedly gone up to as high as 34 from 29 before the invasion of Iraq by the US-led forces.