LONDON, 24 July 2003 — British oil major BP and Anglo-Dutch group Royal Dutch/Shell have both agreed to buy 10 million barrels of Iraqi crude, the companies said yesterday, the first long-term deal for Iraq’s oil since the end of war.
“We can confirm that we’ve been offered by SOMO (Iraq’s State Oil Marketing Corporation)... a term contract from Aug. 1 which will go through until Dec. 31,” a Shell spokeswoman told AFP. “It’s to receive one very large crude carrier of two million barrels per month for five months of Basrah light crude,” she said. The oil would be shipped from the Gulf export terminal at Mina Al-Bakr in southern Iraq, she added.
A BP spokesman confirmed that the company had signed a similar deal for 10 million barrels over five months, giving no further details. Two weeks ago, both BP and Royal Dutch/Shell bought two million barrels each of Iraqi crude in a separate deal.
That was the first sale of Iraqi crude produced since the end of the war to oust Saddam Hussein, which was effectively declared over on May 1 by US President George W. Bush declared.
The export of sufficient quantities of Iraq’s vast oil reserves is central to coalition plans to rebuild the war-shattered country.
However, hopes the country’s crude would flow again in large quantities soon after the end of hostilities have been hit by the dilapidated state of its oil infrastructure as well as an often perilous security situation.
The problems have been emphasized by a string of apparent sabotage attacks on energy pipelines.
Yesterday it was reported that Iraq’s Oil Ministry had finalized an “optimistic” plan to boost oil production to 1.5 million barrels per day by October, rising to 2.8 million by April 2004.
The target figures depends on the “necessary security, electric power and finance” being in place, the Cyprus-based Middle East Economic Survey (MEES) said in a report.