Iraqi oil loadings slow as lifters refuse surcharge

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UPDATE 4-Iraqi oil loadings slow as lifters refuse surcharge

November 29, 2000 6:53pm Source: Reuters

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NEW YORK, Nov 29 (Reuters) - Iraqi oil loadings slowed sharply on Wednesday as customers withdrew vessels after refusing to pay a surcharge Baghdad is demanding on its crude exports, oil traders said.

Iraq, which accounts for five percent of all world exports, has been demanding a 50-cent per barrel surcharge on oil liftings from December 1, with payments made into an account outside the control of the United Nations.

Its State Oil Marketing Organization (SOMO) would not load vessels that did not pay the surcharge, oil traders said.

``We had a vessel in the (Gulf) port of Mina al-Bakr but the vessel was not loaded by Iraq so we took it out from the port,'' one customer said of a cargo that was due to load in November.

Western oil lifters have refused SOMO's request on the basis that it would contravene U.N. sanctions, which tightly controls Iraq's oil sales revenues in an escrow account.

A U.N source confirmed that no loadings were currently taking place at Iraq's other main outlet, Turkey's Mediterranean port of Ceyhan. Queues of vessels waiting to load were building up at both Mina al-Bakr and Ceyhan, lifters said.

Iraq by Wednesday night had not amended its December pricing proposal -- rejected as too low on Monday by the U.N. Security Council's Iraqi sanctions committee -- making a break in export flows from Friday increasingly likely.

Western diplomats have said that Iraqi crude cannot be exported without an approved pricing plan.

The U.N. sanctions committee was told by U.N. oil advisors Wednesday that it could either stop loadings Friday or allow them to continue without completed oil-sale contracts, diplomats on the committee said.

NOVEMBER LOADINGS DELAYED

Lifters said SOMO had notified suppliers that some cargoes would not be able to load in November ``for reasons out of their control'' and would be advanced to December.

Another customer said it had been told by SOMO that its vessel was not able to berth due to a ``lack of crude.''

Crude stock levels at Ceyhan's eight million barrel storage tanks are running low, sources say, while oil flow on the line that brings crude to Ceyhan was slowed to just 520,000 barrels per day (bpd) -- about half its capacity, industry sources said.

Even so, lifters doubted that a lack of crude was the reason for the stoppage to loadings.

``According to our information this is not true. The agent says the oil is there,'' said one trader.

U.N. sources said three vessels -- the Iran Seva, the Sea Song and the Front Pride -- are lined up at Ceyhan but were not loading Wednesday.

``This certainly means a few of these cargoes will effectively have a December bill of lading,'' said a trader.

Several lifters have tried to push December loadings into November to avoid paying the surcharge.

But it appears that Iraq is ``tightening the screws,'' said one lifter, whose whose cargo from Mina al-Bakr has been pushed into December.

``We have been advised that if the loading takes place in December, the new mechanism will apply and they (SOMO) would expect payment to be made prior to loading,'' said the lifter.

Iraqi Oil Minister Amer Mohammed Rasheed told reporters in India that Baghdad would defend its price proposal ahead of a December 1 deadline. At the same time he stressed that Iraq wanted to avoid an interruption in export sales of some 2.1 million barrels per day. ^ REUTERS@

http://finance.individual.com/display_news.asp?doc_id=RTK29a6481reuff&page=news

-- Martin Thompson (mthom1927@aol.com), November 30, 2000


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