Tag Archive | "State Oil Marketing Organization"

China to Stop Increasing Iraq Oil Orders

By John Lee.

Chinese oil companies are to maintain their purchasing of crude oil from Iraq’s State Oil Marketing Organization (SOMO) at the 2014 level for next year, according to a report from Reuters.

The decision has been attributed to a slowing of demand growth in China, the varying quality of Iraq’s “Basra Light” crude, and Iraq’s failure to deliver the full contracted volumes in 2014.

This is the first time in almost a decade that volumes have not increased year-on-year.

Reuters data shows that China’s crude imports from Iraq rose in the first ten months of the year by nearly a quarter to 23.49 million tonnes — equivalent to 566,387 bpd — compared with the same period of 2014.

(Source: Reuters)

Posted in Oil & GasComments (2)

SOMO Denies OPEC Price War

By John Lee.

The State Oil Marketing Organization (SOMO) has denied that it is waging a price war against other oil producers.

The company recently slashed price to its Asian customers due to what it described as “changes in the market” but has denied that this was an attempt to undercut other members of the Organization of the Petroleum Exporting Countries (OPEC).

(Source: NASDAQ.com)

Posted in Oil & GasComments (5)

Bigger Discount for Heavy Basra Crude

By John Lee.

Iraq is reported to be giving bigger discounts for heavy crude from Basra from January.

The State Oil Marketing Organization (SOMO) recently abandoned plans to split its “Basra Light” grade into two grades, light and heavy.

Reuters says this latest move is aimed at pacifying buyers who have had to deal with varying quality of blended Basra Light, which can vary from an API gravity of 26 degrees to 34 degrees.

It is believed that from the end of the year, a discount, or “de-escalation factor”, of 60 cents a barrel will be applied for every API degree below 27; a de-escalation factor of 40 cents per API is already in place for Basra crude with an API below 34 degrees.

(Source: Reuters)

Posted in Oil & GasComments (7)

Abdul-Mahdi: Now the Real Work Begins

By Cengiz Çandar for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Adel Abdul-Mahdi, Iraq’s former vice president and current oil minister in Haider al-Abadi’s government, spotted me aboard a flight from Beirut to Istanbul. He was in a rush, on his way back to Baghdad after the Nov. 27 OPEC meeting in Vienna.

I met up with him Dec. 1 around midnight at his hotel in Istanbul, before his early flight to Baghdad. During our tour d’horizon, he hinted about the upcoming, fateful meeting he would be having with Iraqi Kurds waiting to see him in Baghdad to strike an oil deal.

I have known Abdul-Mahdi for a long time and can attest that there is no other Arab politician in Iraq closer to the Kurds than he is. The warm and close friendship he developed with Jalal Talabani, the former Kurdish president of Iraq, during his exile in Damascus when Saddam Hussein held power, makes him an indispensable Iraqi oil minister in Erbil’s eyes.

“Massoud Barzani told me,” Abdul-Mahdi said, “if they cannot come to terms even with me, they probably never can with anybody else in Baghdad.”

Abdul-Mahdi has always had a strategic mind, accumulating tremendous knowledge and experience of the region since the 1960s. A Francophone and a fluent English speaker, he has been an intellectual heavyweight since the days I knew him in 1970s Beirut.

From what he told me, an oil deal between Baghdad and Erbil seemed close, but he remained cautious. A few hours later, he would be sitting down for tough negotiations with Kurdistan Regional Government (KRG) Prime Minister Nechirvan Barzani; Barzani deputy Qubad Talabani, son of the former Iraqi president; and the KRG’s very competent oil minister, Ashti Hawrami.

Posted in Oil & GasComments (3)

Baghdad, Erbil Reach Deal on Oil Exports

By John Lee.

Baghdad and Erbil have reached an agreement resolving the long-running dispute over oil exports and budget payments.

Finance Minister Hoshyar Zebari said that 550,000 barrels per day (bpd) of oil would be sent to the Iraqi oil ministry.

In return, the Kurds will receive their 17% share of the national budget.

The dispute had threatened the future of Prime Minister Haider al-Abadi’s new unity government, the government in Baghdad has withheld budget payments to the Kurdistan Regional Government (KRG) For more than a year, in retaliation for its efforts to export oil unilaterally through Turkey.

Under the new agreement, the KRG will export 250,000 bpd of oil from its fields around Erbil through its pipeline to Turkey, where it will be handed over to Iraq’s national State Oil Marketing Organization (SOMO).

BBC News reports that a further 300,000 bpd will also be exported from oil fields surrounding the disputed city of Kirkuk, which Kurdish Peshmerga forces have controlled since the Iraqi army withdrew in June.

According to The Guardian, the deal will also give a share of the military budget to the Kurdish peshmerga fighters; Kurdish Prime Minister Nechirvan Barzani said Abadi had guaranteed a $1 billion share.

The Special Representative of the United Nations Secretary-General for Iraq (SRSG), Mr. Nickolay Mladenov, welcomed the agreement, saying:

I look forward for the implementation of the agreement as swiftly as possible, including oil exports from the KR-I and Kirkuk, as well as the disbursement of the KRG budget from the Iraqi general budget, and the payment of Peshmergas’ salaries …

“I commend both Iraqi Prime Minister Haidar al-Abadi and KR-I Prime Minister Nechirvan Barazani for their leadership and spirit of compromise in reaching this encouraging agreement.”

(Sources: BBC News, Office of the Prime Minister, UN, The Guardian)

Posted in Oil & GasComments (7)

Plans for 2 Crude Export Grades Shelved

By John Lee.

Iraq’s State Oil Marketing Organization (SOMO) has reportedly abandoned plans to sell two grades of crude oil from its southern Gulf terminals next year.

Platts reports that SOMO informed customers last week that “due to logistical issues” a single type of crude will continue to be marketed in 2015, but with two ranges of API de-escalator:

  • For crudes with 27-34 API, the de-escalator is $0.40/barrel per API degree;
  • For crudes with API below 27 have a de-escalator of $0.60/b per API.

The President of BP Iraq, Michael Townshend, said recently that the country would have trouble exporting two separate grades due to a lack of pipeline and storage capacity.

Iraq currently has only eight tanks at Fao, with another eight planned.

(Source: Platts)

Posted in Oil & GasComments (3)

Future Uncertain for Baghdad-Erbil Oil Deal

By Mohammed A. Salih for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

While a recent deal between Baghdad and Erbil to export oil from the northern fields is seen by many as a breakthrough after years of stalemate, the prospect of further progress on oil exports still remains uncertain.

On Nov. 13, Iraq’s oil minister, Adil Abdul-Mahdi, and Iraqi Kurdish authorities reached a deal whereby the Kurdistan Regional Government (KRG) will export 150,000 barrels of oil per day.

In return, the Baghdad government will possibly deliver as much as $1 billion to the KRG, which has been struggling to pay its employees and fund public projects ever since the central authorities in Baghdad cut its budget in February.

The very terms of the deal, however, still remain somewhat vague. The KRG’s official website stated Nov. 13 that the federal authorities in Baghdad will pay $500 million to the Iraqi Kurdish government, and that the KRG will place “150,000 barrels a day of crude oil” at the disposal of the Iraqi government.

A day later, the Iraqi Ministry of Oil issued a statement reiterating the same information.

But during a joint press conference with Turkish Prime Minister Ahmet Davutoglu on Nov. 21, KRG President Massoud Barzani offered new details on the amount of the payment and where the oil would come from.

“We have agreed that Baghdad will send $1 billion to [Iraqi] Kurdistan through two $500 million installments and in return we will export 150,000 barrels of oil per day from Kirkuk,” said Barzani.

His statement amounted to a bombshell as the figure he gave was higher than previously stated, and he also said the oil will come from Kirkuk’s oil fields, a detail not disclosed officially before.

Posted in Oil & GasComments (5)

Turkish Refiner to Buy Kurdish Crude via SOMO

By John Lee.

Turkish refiner Tupras is to buy crude oil from Iraq Kurdistan sold by the Baghdad’s State Oil Marketing Organisation (SOMO).

The company’s Deputy General Manager, Hasan Tan, told reporters the oil will be sent by pipeline to the Turkish Mediterranean port town of Ceyhan.

The announcement comes a week after Baghdad and Erbil reached a deal to settle a long-running dispute over oil-revenue.

(Source: Reuters)

Posted in Oil & GasComments (0)

IBN Newsletter 'FREE Weekly Subscription'

Advertise with IBN