Iraq has notified its exploration partners that it plans to split its southern Basra oil production into two grades due to quality differences and offer a heavier type of crude from May this year onwards, according to official sources
The decision by OPEC’s second largest producer is expected to affect more than two million barrels per day of crude exports that mainly head to Asia, Reuters reported.
Iraq’s State Oil Marketing Organization (SOMO) informed its partners that it will allocate Basra Heavy crude to companies with technical service contracts, the sources added.
Holders of technical service contracts include Lukoil, Petronas, CNPC, CNOOC, BP, ExxonMobil, Shell and Total.
“It’s a significant development depending how things pan out,” said a source with a western firm.
Iraq first floated the idea in October 2014 due to a rise in new production of heavier Basra crude from southern fields such as West Qurna. Basra’s quality swings from a heavy oil with API gravity at 26º to a medium type at 34º.
However, SOMO’s plan was delayed as it took time to sort out details especially on how the new official selling price for the heavy grade will be set.
