LONDON, 10 July 2003 — US and UK-based oil majors have taken the lion’s share of Iraq’s second post-Saddam crude oil sell tender, companies confirmed yesterday.
A Royal Dutch/Shell spokesman said the major had been awarded two million barrels of Basra Light crude in the tender, which closed on Monday, joining US ChevronTexaco and BP, who both confirmed winning earlier.
The fourth cargo went to Swiss-based trading house Taurus, the first trader to win a cargo since the US invasion. Baghdad had expressed a preference for refiners in the tender. It is the first time the British companies have been awarded Iraqi crude since the US-led invasion. ChevronTexaco won its first Basra Light cargo in the previous tender. Iraqi officials were due to confirm the awards yesterday.
Six million barrels of the crude are bound for US shores, two-thirds of that to the West Coast, while Shell is likely to take its cargo into northwest Europe, market sources say.
Taurus will load the first cargo on July 10, followed by BP around July 13, Chevron in the July 20-25 window and Shell on July 26-28, they added.
Sources initially indicated that Brazil’s state-owned oil company Petrobras, a frequent direct buyer of Iraqi crude under the old UN system, had won the fourth cargo, but that stem now appears to have been awarded to Shell.
Iraq tendered to sell eight million barrels of Basra Light crude from the Gulf port of Mina Al-Bakr for lifting July 10-31. At least three of the cargoes will be heading to US shores.
This is the first time Iraq has sold crude produced since the unseating of Saddam Hussein, as its first tender in June sold oil that had been sitting in storage for months.
ChevronTexaco, a big user of Iraqi oil for its US West Coast refineries, is the only company to win in both tenders, while its US rival ExxonMobil has yet to buy a single barrel directly.
Iraq’s State Oil Marketing Organization (SOMO) continued to choose a wide array of winners, as BP and Shell joined Total, which won a cargo in the first tender. Spain’s Cepsa and Repsol plus Turkish refiner Tupras also won cargoes in the previous tender.
The loading rate comes to a paltry 363,000 barrels per day (bpd), versus pre-war capacity from the north and south of over two million bpd, underlining Baghdad’s difficulties in resuming sustained production from Iraq’s troubled oil sector.
Repeated pipeline bombings have hampered supplies flowing north to the Ceyhan port while “economic sabotage” in the south is also causing difficulties, oil officials say.
Meanwhile, the occupation government’s top official said Iraq will rely almost exclusively on oil revenues to finance its first public budget in more than three decades, but will fall more than $2 billion short.
Paul Bremer, the coalition’s civil administrator, said Iraq’s revenues are expected to total $3.88 billion over the next six months, with $3.45 billion — nearly 90 percent — coming from oil, which it estimates to sell for $20 a barrel. Fees and other charges will make up the rest. The coalition figures expenditures over that time will be $6.1 billion.
Iraq is “a rich country that is temporarily poor,” Bremer said in an interview. “We are not going to be able to generate enough capital over the next year and a half to pay for everything, even if we make all of our oil revenues targets.”
To make up the cash shortfall, the coalition will have to draw on capital reserves, which include frozen Iraqi assets. The sober outlook for Iraq’s first postwar budget underscores the dilapidated economy inherited from the Saddam Hussein regime.
