New Basra Heavy Crude Short-Changes IOCs

By John Lee.

According to a report from the Financial Times, Iraq’s introduction of the new Basra Heavy crude oil grade is causing problems for the international oil companies (IOCs).

Since its launch in June, IOCs such as Shell, BP, Total, Lukoil, Petronas and China National Petroleum Corporation (CNPC)  have received their remuneration for development of Iraq's oilfields in the form of Basrah Heavy crude, but the companies argue that Baghdad is valuing the new grade above what buyers are willing to pay, leaving them out of pocket.

In an oversupplied market, traders have been forced to call at multiple ports, travel further or carry out ship-to-ship transfers, adding to costs; companies are thought to be losing up to $4 million on every supertanker.

(Source: Financial Times)