Iraqi oil exports could fall by over 300,000 b/d next month due to maintenance on one of the country’s four single-point moorings in the Persian Gulf.
The oil ministry will carry out maintenance work at SPM-3, one of the operating single-point moorings connected to Iraq’s key southern export infrastructure, sources close to the matter said Monday.
Without the pumping capacity to divert crude to the other SPMs, or to the Basra and Khor al-Amaya oil terminals, this will mean production will have to be pulled back, while the repairs take place, the sources said.
Differentials for Iraq’s Basrah Light and Basrah Heavy have risen in recent days as Asian refiners look to cover requirements from the spot market amid a reported shortfall in availability, trading sources said Friday.
Some sources said they expected exports to be cut by as much as 10 million barrels in April. Iraq has been exporting around 3.5 million b/d of crude this year from its southern oil terminals, where Basrah Light and Basrah Heavy load, equating to around 105 million barrels/month.
April loading cargoes of Iraq’s Basrah Heavy crude grade were being traded on a destination unrestricted basis at around a 70-90 cent/b premium to the grade’s official selling price, trading sources said.
The grade’s OSP for April to Asia is set at a $4.50/b discount to the average of S&P Global Platts Oman and Dubai crude assessments. The premium for Basrah Light relative to its OSP was also rising, but to a lesser extent, traders said.
It was not immediately clear how long the maintenance would take.
State Oil Marketing Organization, or SOMO, which handles all of Iraq’s crude oil sales, couldn’t be reached for a comment on the matter.
Both Khor al-Amaya and al-Basra terminals operate below their installed capacity due to a number of issues, including old infrastructure, shallow waters, and general congestion in Iraq’s narrow territorial waters.
Neither can increase output even if it had new pipelines, however.
Iraq’s SPMs are actually operating at around half their installed capacity. But in order to reach 850,000 b/d each, work at the onshore Fao terminal would need to be concluded. This includes required storage and pumping capacity, which Iraq is years overdue in completing.
Separately, Iraq is also facing a broader increase in the amount of oil being lost from older pipelines in the Persian Gulf area that are in need of being repaired or replaced, sources said.
The sources, from the oil ministry as well as industry observers, said the leaks are small and are being quickly cleaned up and constantly monitored by state-run Basra Oil Company.
“There is a coordination between the Transportation Ministry, through the Iraqi ports company, and the Oil Ministry through Basra Oil Company to remove those spills,” one senior ports official said.
The sources said the past year of record export flows have pushed the pipelines, to the Khor al-Amaya and al-Basra Oil Terminals, past their operational capacities.
Exports have decreased over the past three months as a result, two senior ministry officials said.
The lines are long overdue replacement, having been de-rated below their installed capacity in order to avoid rupture, according to sources and older studies conducted by the US Army Corps of Engineers.
“They have been running a long time and they have been leaking, but will they collapse? No one knows,” said a longtime industry observer of the Iraqi export system.
The main problem is the 42-inch line that runs to Khor al-Amaya, several sources said.
Source: PlattsPrevious Next