Iraq’s state oil marketing firm is in discussions with Exxon for potential crude storage sites close to demand markets in Asia, the United States, and Europe, Bloomberg reports, citing a senior Iraqi executive.
“We, as SOMO, are in need to create a stable market for Iraqi crude oil, and to have good strategic storage for Iraqi crude oil and oil products in future as well,” Ali Nizar, the director general of the Iraqi state oil marketing company, SOMO, said.
Iraq plans to use storage sites in Singapore and “wherever there is an opportunity to target major markets including Asian market and European market,” the executive said, as carried by Bloomberg.
SOMO is considering whether to use existing storage sites or to take part in building new storage facilities close to its demand markets, according to Nizar.
Iraq, OPEC’s second-largest oil producer, and other major oil-producing nations in the Gulf have been looking to have overseas storage in recent years.
For example, Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates has been using and storing petroleum at the existing crude storage sites in India, the world’s third-largest crude oil importer.
The recent geopolitical flare-ups and the threat to key shipping lanes in the Middle East, including the critical Strait of Hormuz, have prompted Middle Eastern producers to seek to have at least some supply stored outside the region to hedge against potential disruption.
Iraq is also looking to boost its oil production in the medium term, under a $25-billion deal with BP to redevelop Kirkuk fields.
The wider resource opportunity across the contract and surrounding area is believed to include up to 20 billion barrels of oil equivalent, according to the British supermajor.
For Iraq, the agreement is aligned with its plan to raise its oil production capacity to above 6 million barrels per day (bpd) by 2029, up from about 4.5 million bpd now.
By Tsvetana Paraskova for Oilprice.com
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