DAEGU, South Korea: Iraq said China is seeking to increase purchases of its crude by more than two-thirds next year, stepping up the rivalry between Baghdad and top exporter Saudi Arabia for a bigger slice of the growing Asian market.
Rapid increases in Iraq’s oil output after years of unrest have helped cushion oil markets from wide price swings as shipments from OPEC-member Iran were halved due to tightening Western sanctions amid unstable output from other exporters such as Libya and Sudan.
Iraq has provided crucial supplies, giving consumers another option besides Saudi Arabia as the main alternative exporter.
“Iraq is in a lucky position because we always get more requests than we can actually supply,” Deputy Prime Minister for Energy Hussain Al Shahristani said yesterday at the World Energy Congress in South Korea.
China is seeking 850,000 barrels per day (bpd) of crude from Iraq next year, Al-Shahristani said, significantly narrowing the gap between Iraqi and Saudi Arabian exports. The energy minister also said he expects more requests for 2014 supply from China.
Saudi Arabia shipped 1.08 million bpd of crude to China in the first eight months of this year, while Baghdad has an annual term deal to sell about 500,000 bpd into China this year.
It was not immediately clear which Chinese oil companies were seeking the additional volumes. But a rapid increase in China’s refining capacity over the past few years means it is reasonable to expect it to seek a quantum jump in purchases.
“An increase of 30,000 bpd is quite reasonable. Sinochem could raise its crude purchase from Iraq for its newly-built refinery in Quanzhou,” said a senior Chinese crude oil trader. “Other companies such as Sinopec may also raise imports from Iraq. China will absorb the increase of Iraqi crude exports.”
Iraq is set to expand its oil export capacity and is wooing Asian customers by offering easier payment terms as it ramps up output, countering infrastructure and security issues that have this year hampered the Middle Eastern nation’s efforts to maintain steady output and exports. REUTERS