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Iraq Somo to market third Basrah crude grade
11/2/2020 12:00:00 AM

Iraqi state-owned marketer Somo has informed customers that it plans to make a third Basrah crude stream available from January, according to a document seen by Argus.

As of next year, the company intends to offer a Basrah Light grade with a gravity of 33°API, a Basrah Medium crude with 29°API and a Basrah Heavy grade with 24°API.
Somo first floated the idea of a third Basrah crude offering back in 2017. It marks the second time that Iraq has split its Basrah stream. Rising production from heavier oil fields and the country's limited capacity to blend crude to a set gravity and sulphur content prompted Somo to separate Basrah supplies into the existing Light and Heavy grades in mid-2015.
The two grades have since been marketed with on-paper gravities of 34°API and 26°API, respectively. But Basrah exports have never achieved their intended quality specifications, nor has Somo's Kirkuk blend which is marketed at 36°API. This has forced the firm to offer quality compensation to buyers, depending on the gravity of the volumes they received at loading.
Argus tracking data estimate that shipments of Basrah Light averaged 2.18mn b/d over January-September this year, accounting for 73pc of total Basrah exports. Basrah Heavy volumes averaged just under 800,000 b/d during the same period.
Somo said its latest marketing move is an "intended segregation" of Basrah Light into two grades. It has asked clients to submit their annual requirements for the new Basrah Light and Basrah Medium grades by 13 November. The Iraqi company said it will provide the full specifications of the revamped grades "shortly". Somo had initially asked buyers to nominate their 2021 requirements by 15 October, but only listed Basrah Light, Basrah Heavy and Kirkuk as options at the time.
It is not immediately clear whether and how Somo will continue to offer its crude quality reimbursements — one of two subsidies the company offers. Somo also offers freight compensation, intended to increase Basrah's appeal to European and US buyers.
At 29°API, the new Basrah Medium will compete more closely with Russian Urals, which currently has a typical gravity of 29.89-30.66°API depending on the loading port. The new Basrah Light's 33°API will position it closer to Omani crude, which typically has an API of 33.3°, as well as Saudi Arabia's Arab Light at 33.9°API and UAE grade Upper Zakum at 34°API.
Source: Argus