BAGHDAD, 13 June 2003 — Iraq’s state oil marketing company SOMO yesterday awarded its first post-war tender to sell 10 million barrels of crude held in storage but only one US company was among the six winners.
The tender was won by Spanish refiners Repsol and Cepsa, Turkish Tupras, Italian ENI and French Total while ChevronTexaco was the only US company.
Of the 10 million barrels sold from storage in Turkey, 5.5 million will go to the European market and four million to the US, the remainder left for “tolerance,” SOMO Director-General Mohammed Al-Jibouri told reporters.
Total and Chevron together were awarded the four million barrels for the United States, with Chevron taking the entire Basrah light volume of two million barrels.
Jibouri refused to reveal prices or details of what volumes had been awarded to the other winners but market sources in Europe said ENI, Cepsa and Repsol had received one million barrels of Kirkuk each, with Tupras winning the rest.
The sources also declined to comment on prices. Of the 10 million barrels tendered by SOMO, Basrah Light comprised two million barrels and Kirkuk eight million barrels. The Basrah Light will be lifted from the Turkish port of Mina Al-Bakr and Kirkuk from Ceyhan. A total of 52 companies had bid for the tender, and out of that total, three companies did not qualify, Jibouri said.
“We did eliminate traders and awarded only to refiners,” he said.
SOMO had earlier said it would give preference to refiners’ bids, cutting out middlemen who dominated the sales roster under the now-defunct United Nations oil-for-food program. “I expect the exports to resume in a week or 10 days,” Jibouri said. “But we are ready and we are only waiting for the companies to be ready to lift.”
Oil market players expressed surprise at the result which bucked expectations that US and British firms would dominate the first sell tender issued by post-war Iraq.
“One would have thought SOMO would have awarded more to US and British companies. And given the French position in the war, people are surprised that Total has got in there with two million barrels,” one trader said. But an Iraqi oil analyst said: “This should show the world that Washington is not interfering in Iraqi oil policy.”
Some traders said the result had been more or less expected.
ChevronTexaco, which previously bought four to eight million barrels a month, was always a front-runner for Basrah Light, while Turkey was seen as a strong bidder for Kirkuk as buying oil stored in Ceyhan is cheaper than shipping it from elsewhere.
“We have been lifting Iraqi oil for many years, we had direct contact with SOMO and the Mediterranean is the natural destination for Iraqi oil,” one trader said.
Players said they are now waiting for long-term contracts though which SOMO will start full-fledged exports. Jibouri said the firm would start signing contracts after the barrels from storage are emptied. “After we sell these 10 million barrels, we are targeting one million barrels per day of exports but this is of course dependent on the security situation and we have to deal with the sabotage in the south,” Jibouri said.
