Page 15 - MEOG Week 13 2021

MEOG FINANCE & INVESTMENT MEOG

Trading of Abu Dhabi’s

Murban crude futures begins

UAE THE new ICE Futures Abu Dhabi (IFAD) oil Lulu and Upper Zakum, accordingly.
exchange began trading its key Murban crude
futures contract this week as the Emirate seeks Crude capabilities
to rival regional benchmarks. The move follows Iraq’s launch of the Basrah
The inaugural contract was priced at $63.93 Medium crude grade, seen as an important step
per barrel at launch with 2,132 lots traded on the in increasing the country’s flexibility of supply
first day, giving a traded total of more than 2mn to key Asian markets and to develop its trading
barrels. It is priced two months ahead, with June capabilities.
the first expiry month for physical deliveries at Buyers of Basrah Light and Basrah Medium
Fujairah on an FOB basis. will be compensated by $0.4 per barrel for each
IFAD was launched with the backing of the degree below the grade’s associated agreed
Intercontinental Exchange, Abu Dhabi National API gravity, which are set at 33 degrees and 29
Oil Co (ADNOC) and international partners, degrees respectively.
including those involved in the state oil firm’s Meanwhile, Basrah Heavy lifters will receive
upstream development projects: BP, Total, Royal a discount of $0.6 per barrel for every degree the
Dutch Shell, Inpex, Vitol, PetroChina, South consignment falls below 24 API.
Korea’s GS Caltex, Japan’s Eneos Holdings and An industry source told MEOG that the
Thailand’s PTT. move to introduce Basrah Medium is an effort
A light, sweet crude, Murban is has an API to reduce the amount of compensation paid by
gravity of 39.9 degrees and a sulphur content of Baghdad for failing to meet the required crude
0.78%. It comprises more than half of ADNOC’s density. “We’ve seen significant fluctuations in
total production at around 2mn barrels per day Iraqi crude density and these are costing the
(bpd) from some of the emirate’s largest fields, authorities hundreds of millions of dollars in
including Bab, Bu Hasa, North East Bab and compensation. It seems that SOMO is of the
South East Asset. thinking: ‘if we get them to pay for a lower crude
It offers an alternative to the Dubai and Oman grade, we avoid the compensation payments’.”
crude future benchmarks that are operated by The source added: “Heavy crude has been hit
S&P Global Platts and traded on the Dubai Mer- hard by the OPEC+ cuts with Iraq, Saudi and
cantile Exchange (DME) respectively. Russia reducing flows, but the market for lighter
ADNOC will use the Murban future to price grades is oversupplied with producers maintain-
its monthly official selling price (OSP) for the ing more valuable streams and Libyan produc-
grade, pricing its other three grades, Das, Umm tion resuming.”™

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