Iraq exporting 100,000 b/d of fuel oil: sources

Iraq is exporting around 100,000 b/d of fuel oil from its southern terminals on the Persian Gulf, with much of the product shipped to Asia, sources close to the oil ministry said.

Some 500,000 cu m of fuel oil is being shipped monthly from jetties at the Khor al-Zubair terminal, near the Umm Qasr port at the northern tip of the Persian Gulf, the sources said this week.

The fuel oil is sold on an FOB basis, the sources said.

Of the total, around 420,000 cu m was transported by pipeline from storage tanks at the Basra refinery, and another 80,000 cu m moved by trucks from Iraq’s smaller refineries in the central and southern provinces.

The oil ministry said February 13 it was also transporting fuel oil and other products by rail tanker from the 140,000 b/d Daura refinery near Baghdad, following the rehabilitation of the country’s rail network.

The new loading and unloading platforms at Daura and the rail link to the south will eventually allow Iraq to transport another 1,000 cu m/d of fuel oil and 4,000 cu m/d of other products from the refinery.

This is all managed by state-owned Iraq Oil Tankers Co., which took over the fuel oil operations from State Oil Marketing Organization — the country’s crude marketer — two years ago. IOTC receives all the proceeds from the fuel oil sales, the sources said.

Iraq’s fuel oil production has been increasing in the last few years, averaging 267,000 b/d in 2017, up from 220,000 b/d a year earlier, according to data from the Riyadh-based Joint Organizations Data Initiative.

The country has for years injected fuel oil into its crude export stream, boosting the crude volumes, even though this affected their quality.

But it has curtailed injection since mid-2015 when it started exporting two types of crude — Basrah Light and Basrah Heavy — from the Gulf terminals, to preserve their quality and help meet its OPEC production cut obligations.

Iraqi fuel oil exports averaged around 65,000 b/d in 2017, although the volumes fluctuated over the year, hitting a high of 106,000 b/d in October and low of just 8,000 b/d in December, according to JODI data.

Market sources said Shell has been a major buyer of Iraqi fuel oil. Around 300,000 mt/month is cracked and another 400,000 mt/month is straight run material, which generally ends up in Asia for further refining. Some of the fuel oil also goes to the US, the sources said.

It had previously been shipped to Fujairah, but has moved further east with Fujairah demand weak in the second half of 2017. Fujairah’s stocks of heavy distillates and residues fell to a record low of 5.298 million barrels last week on a flat market structure.
Source: Platts