Taiwan has begun purchasing high sulfur crude oil from Kurdistan to replace grades out of production due to the Organization of Petroleum Exporting Countries' (OPEC) recent output cuts, according to a new report by Reuters.
Government-run CPC Corp purchased one million barrels of KBT from the Kurdish Regional Government (KRG) for the first time in 2017 Q2. In addition, Formosa Petrochemical Corp. bought crude of the same grade after a nine-month pause, according to company officials.
Formosa is set to receive the cargo shipped through the Ceyhan port in Turkey in April. More shipments will arrive in the following months.
"Kurdish? Yes, we bought quite a lot," Formosa Petrochemical spokesman KY Lin told Reuters.
Kurdistan's KBT has been key in combatting the reduced availability of heavy crudes from countries that have pledged to cut 1.8 million barrels of output per day. Saudi Arabia, the de facto leader of OPEC, which negotiated the deal, is one of the most prolific providers of heavy crude. The Gulf giant has cut output by twice as much as it had promised in November.
In December, a KRG official told Reuters that he did not expect to see the OPEC deal affect the region's production, even though the Baghdad government agreed to downsize production during the agreement's six-month term.
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"Exports look similar to February," an industry source who monitors shipments from southern, non-Kurdish Iraq, told Reuters. "To be fair, the market wasn't expecting them to cut."
Iraq's oil minister said this month that his country plans on boosting oil production capacity to 5 million barrels per day this year, up from around 4.5 million barrels per day in November. The comments could affect OPEC's ability to rollover the production cuts to the second half of 2017.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More