Iraq begins heavy crude exports after complaints about quality

KHALID AL-ANSARY and ANTHONY DIPAOLA

BAGHDAD, Iraq (Bloomberg) -- Iraq, OPEC’s second-biggest oil producer, is exporting a new grade of crude after customers complained about the quality of oil from the country.

The Basrah Heavy crude will be exported for the first time starting Monday, shipped from the southern port on the Persian Gulf, Oil Minister Adel Abdul Mahdi said on his Facebook page. Iraq previously sold only Basrah Light grade, which sells at a higher price than Basrah Heavy, from the south.

“This step is not only necessary but a must to preserve Iraq’s crude reputation,” Abdul Mahdi said. Iraq is separating heavy from light oil for the first time, he said.

Iraq boosted oil outupt to the highest in more than three decades in April at 3.8 MMbopd as exports rose to a record 3.1 MMbopd, the International Energy Agency said in monthly report. Saudi Arabia is the only bigger producer in the Organization of Petroleum Exporting Countries.

Light oil is easier to refine into gasoline and diesel, while heavy crude is thicker and requires more processing to produce those fuels. As oil from Iraq’s south became heavier as the country tapped new wells, it wasn’t able to consistently supply cargoes of the same quality, forcing it to offer discounts to some Basrah Light buyers.

Selling two grades will allow Iraq to better guarantee the quality of the two blends and to get the most value for its exports, Abdul Mahdi said.