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(Bloomberg) — Iraq, OPEC’s second-biggest producer, will start exporting Basrah Heavy crude next month after offering discounts for the new grade in Europe, Asia and the Americas.
The heavy grade “will help us to preserve our oil qualities” and increase “output chances,” Iraq’s Oil Minister Adel Abdul Mahdi said on his Facebook page. Shipments will represent a “big achievement,” he said.
Iraq is offering Basrah Heavy after facing pressure from customers to split its main Basrah Light crude into two grades to preserve quality. The country pumped 3.34 million barrels a day in March, state-run Oil Marketing Co. known as SOMO said April 16. Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries.
Oil prices have slumped 40 percent in the past year, cutting the Iraqi government’s income even as it battles Islamic extremists that have seized parts of the country mostly in the north. Brent settled on Friday at $65.28 a barrel.
Crude exports from northern Iraq via SOMO will rise to 550,000 barrels a day in early May, 600,000 barrels a day in June and 625,000 barrels a day by August, Kawa Mohammed, lawmaker from the oil and gas committee of Iraq’s parliament, said by phone on Sunday. Iraq pumped about 2.4 million barrels daily at the end of 2010 and plans to boost capacity to 6 million barrels by 2019.
The official selling price for Basrah Heavy to Asia for May was set at a $6.85-a-barrel discount versus the Oman and Dubai benchmarks, according to SOMO. It’ll sell to Europe for an $8.45 discount versus North Sea Brent and to North America and South America at $1.40 a barrel below an index of sour crudes.
©2015 Bloomberg News
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