Iraq offers fuel oil after warning on illegal exports

Iraq's state-owned Somo has issued a mini-term tender to export straight-run fuel oil (SRFO) on a ship-to-ship basis from Khor al-Zubair during January-March 2021, shortly after reminding trade partners that it is the only authorised oil exporter from the country.

Somo offered 2.34mn t of 3.7-5pc sulphur, 0.94-0.97 g/cm³ density, 108-307cst viscosity SRFO originating from several Iraqi refineries.

If two successful bidders emerge, the SRFO will be divided between them on a 60:40pc basis, the tender document said. The split will be 50:25:25pc if the supplies are awarded to three bidders. Bids, which are to be placed against Mideast Gulf 180cst fuel oil assessments, must be submitted by 1 December and stay valid for 20 days.

Before issuing the tender, Somo sent an urgent memo to its trading partners reminding them that it is the only legal entity authorised to import and export crude and oil products to and from Iraq.

Iraqi fuel oil exports can currently only be loaded from the Sake and Pola tankers, Somo's director-general Alaa al-Yasri said in the memo, which was seen by Argus.

"The Iraqi ministry of oil and its affiliate Somo shall reserve the right to take all legal actions against any company that may deal with bodies other than Somo, in addition to the confiscation of fuel oil and naphtha cargoes smuggled across the borders, as well as suing sellers, purchasers and transporters of such cargoes inside or outside Iraq," the memo said.

The memo comes against a backdrop of persistent rumours that Iranian high-sulphur fuel oil (HSFO) is being exported through third parties using falsified loading documents that show the origin of the cargoes as Iraq.

Iran is a major producer of fuel oil and used to be the main supplier of HSFO to the Middle East's major bunkering hub of Fujairah in the UAE. The reimposition of US sanctions has led Iran to try to reduce fuel oil production by various means, including cutting refinery run rates, expanding the use of HSFO in power generation and supplying the Iranian fleet with domestically produced bunker fuel.