Page 8 - MEOG Week 29

MEOG P i P e L ines & trans P ort MEOG

Iraq cuts exports to meet OPEC+ quota

iraq IRAq’S State Oil Marketing Organization This left output at more than 650,000 bpd
(SOMO) will reduce the country’s exports to above its OPEC+ quota, and following a stern
refineries in Asia and Europe as Baghdad seeks telling off by the cartel during a recent meet-
to comply with its commitment to the OPEC+ ing, Baghdad is expected to make up for past
deal. non-compliance going forward.
SOMO officials were quoted by Bloomberg Last week, Baghdad agreed to make compen-
last week as saying that at least two buyers had satory cuts as it sought to redress its previous lack
been told they would not receive any Basrah of compliance with the OPEC+ deal. This will
crude grades in August, but that the marketer see an additional reduction of 70,000 bpd in July,
would seek to accommodate them in September. another 314,000 bpd in August and 313,000 bpd
Meanwhile, reduced volumes will be sent to in September.
four Asian refiners, while three European refin- IOCs operating the country’s bountiful
eries will face a shortfall. southern oilfields have once again been asked
According to Bloomberg, Iraq cut the term to reduce production, and Middle East Oil &
oil supplies to several Asian and European buy- Gas (MEOG) understands that they are to be
ers by 40-80% for July. compensated for the inconvenience. Following
With heavy crudes from Venezuela in par- our coverage in Week 26 of the call on IOCs and
ticular out of circulation because of sanctions, Basra Oil Co. (BOC) to cut output by 350,000
the market has heated up for heavier Iraqi grades. bpd and 300,000 bpd respectively,
Basrah Heavy accounts for around 1.25mn bar- MEOG understands that Lukoil had previ-
rels per day of Iraq’s total crude output, and as ously renegotiated the terms of its technical ser-
production expands, this figure is expected to vice contract (TSC) for West qurna 2 upwards
surpass 2mn bpd by 2025. from the $1.15 per barrel originally agreed in
In May, the country was only able to imple- 2010. This is understood to have been part of
ment 46% of its commitment to reduce output by talks with Baghdad to revise downward the
1.06mn bpd to 3.6mn bpd, with around 300,000 field’s plateau production rate as it became clear
bpd coming from ‘natural’ reductions at Halfaya that the crucial Common Seawater Supply Facil-
and Gharraf as a result of cancelled orders and ity (CSSF) would not come on stream in time to
limited storage. provide the required water to boost output.™

Bulgaria wary of US TurkStream sanctions

turkey THE sanctions that the uS is planning to impose half of 2022, respectively.
on companies that participate in the construc- The project faced objections from the uS.
tion of the second line of the TurkStream In January, under Secretary of State for Polit-
pipeline could affect Bulgaria, Deputy Prime ical Affairs David Hale said that his country is
Minister Tomislav Donchev said last week. against the construction of a second line of the
In Bulgaria, the local extension of Turk- TurkStream pipeline via Bulgaria as it views it as
Stream is named Balkan Stream in an attempt of a geo-strategic project of Russia.
the government to show it plans to use the pipe- TurkStream spans a 930-km route across the
line not only for Russian gas. Black Sea. It helps to meet Turkey’s ambition of
“Based on the information that we have at becoming a gas hub serving European markets.
the moment, one thing is certain - there will be However, analysts have noted that Turkey will
sanctions on the companies which are building not be able to use its role as a transit state for
TurkStream. It is possible that this concerns us, Russian gas to Europe as leverage over Moscow
but it is also entirely possible that it doesn’t”, because if it attempted to play politics in that way
Donchev said. The uS is expected to announce the Kremlin could simply switch gas volumes
within days what sanctions it plans. In February, back to ukraine.
Energy Minister Temenuzhka Petkova said that Later in the week, uS Secretary of State Mike
the country will not stop the construction of Bal- Pompeo told a news conference that his depart-
kan Stream upon uS pressure, claiming it is local ment was updating public guidance for author-
project that has nothing to do with TurkStream. ities under the 2017 Countering America’s
However, several months earlier the same Adversaries Through Sanctions Act that could
project was even formally recognised as part of “put at risk” of uS sanctions investors in the
the TurkStream pipeline. Gazprom has decided Nord Stream II pipeline running from Russia to
that its second line will span Bulgaria and Serbia Germany and a branch of the TurkStream pipe-
starting from 2020, then go through Hungary line running from Russia to Turkey via a Black
and Slovakia starting from 2021 and the second Sea route.™

P8 www. NEWSBASE .com Week 29 22•July•2020