SINGAPORE (Reuters) - Iraq’s Oil Marketing Company (SOMO) has notified clients that it plans to launch a third crude oil export grade called Basra Medium in January, two sources with knowledge of the matter said this week.
The new medium-sour crude will be created by splitting the existing Basra Light production into two grades, according to the sources and a copy of the Nov. 2 notice reviewed by Reuters.
Basra Light, exported from the Basra Oil Terminal offshore southern Iraq, accounts for the bulk of the country’s exports and revenues. Iraq exported about 2.77 million barrels per day of Basra crude in October and it is the second-largest producer in the Organization of the Petroleum Exporting Countries.
Basra Light will have an API gravity of around 33 degrees after the split while Basra Medium’s gravity will be about 29 degrees, the letter showed. That would be similar to Qatar’s al-Shaheen crude grade.
The existing Basra Heavy crude, which was created in 2015, has an API of around 24 degrees.
API gravity is an indicator of an oil’s density. Grades with a lower gravity number are considered heavier and tend to yield less gasoline and diesel when refined.
The move could stabilize the quality of Iraqi crude for buyers, but their costs may increase if SOMO decides to remove a price mechanism currently used to compensate buyers for API gravity fluctuations, one of the sources said.
SOMO will set official selling prices for each of the three grades, according to the notice.
Buyers have to notify SOMO by Nov. 13 of the volume they plan to lift for each grade in 2021. Basra Medium crude could be nominated either as part of a buyers already required volumes or as additional quantity for 2021.
SOMO did not immediately respond to a request for comment.
Reporting By Shu Zhang; Editing by Florence Tan and Christian Schmollinger
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