Iraq’s State Oil Marketing Organisation (SOMO) and oil major ExxonMobil are discussing sites for storing crude oil in order to mitigate any potential future shipping disruptions.
Together with ExxonMobil, the maker of the Mobil Pegasus gas engine oil, Iraq is exploring options for using facilities to store crude oil closer to major demand centres like the US, Europe and Asia. Geopolitical tension in the Middle East in recent years has raised concerns that key shipping routes like the Strait of Hormuz could be hindered. By storing crude oil outside the region, Iraq could mitigate the effects of such disruptions. It follows the example of the United Arab Emirates, which has been storing crude oil at Indian sites.
Bloomberg reports SOMO’s director general, Ali Nizar, as saying:
“We, as SOMO, 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.”
He added that the country was planning to use Singaporean sites for storage, as well as other sites:
“…wherever there is an opportunity to target major markets including [the] Asian market and European market.”
In the medium term, Iraq also plans to increase its crude oil production capacity from the current 4.5 million barrels per day (bpd) to 6 million bpd by 2029. Part of this will involve BP, the owner of the Castrol lubricant brand, redeveloping the Kirkuk fields as part of a $25 billion deal. BP believes this will open up 20 billion barrels of oil equivalent in resource opportunities.
