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BUYERS OF IRAQI CRUDE ARE CONCERNED ABOUT THE DELAY OF SUPPLIES
August 23, 2009
Buyers of Iraqi crude are concerned about the delay of supplies
Translated by IRAQdirectory.com - [8/4/2009]
In the second half of 2009, Iraq agreed to sell larger quantities of oil than it was able to deliver in the first half, which raises the concern of some clients on costly delays in the supplies.
Iraq wants to increase exports in July to the highest level since before the US-led invasion in 2003 to reach more than two million barrels a day. Baghdad seek to pump more than 4, 2 million barrels a day to the world markets by the end of the year.
Iraq, which is a member of the Organization of Petroleum Exporting Countries (OPEC), concluded agreements based on its optimistic anticipations in spite of the failure in achieving the ambitious goals of production in the oil industry which suffered for decades of war and sanctions.
According to industry sources, Iraq sold about 3, 2 million barrels per day through fixed-term contracts in the second half of the year, up from 24, 2 million barrels per day sold in the first half, but did not deliver them in full. The total exports of Iraq in the first half reached 1.85 million barrels per day, less about 400 thousand barrels per day than the targeted quantity; sources said that this resulted in some delays in loading cargo and cost oil purchasers overdue fines on the date of delivery. Any delay may upset refineries which require a fixed date for the arrival of crude oil in order to determine the rates of treatment and to purchase other raw materials for the process of mixing.
A buyer of Iraqi oil, preferred to be anonymous, said that we can expect continuing delays in deliveries; it seems that they sell more than they can deliver in the south. Other buyers of Iraqi oil said that Baghdad usually conclude fixed-term contracts to sell quantities of crude greater than anticipated, in case customers decide not to get their full monthly allocations. One of the buyers also said that a refinery can overcome the delays by having sufficient stocks or buying oil from the market if necessary. According to several buyers of Iraqi oil, the high official selling prices for crude could reduce demand, which reduces the risk of not getting enough shipments.
Many buyers said that Kirkuk oil exports from the Turkish port of Ceyhan, are not a problem; those exports are increasing and less vulnerable to delays than in the past because of the improving security situation. Obviously, Kirkuk supplies have become more reliable now, that many buyers of Kirkuk crude have concluded more contracts recently.
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