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Iraq’s Somo close to JV with Zhenhua for crude oil
August 29, 2018
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BAGHDAD/BEIJING: Iraq’s state oil marketer Somo is close to a deal with China’s state-run Zhenhua Oil to boost the OPEC member’s crude oil sales to the world’s top oil importer, four sources with knowledge of the matter said.

Iraq is the second-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC). The move will bolster Iraq’s position in Asia, the world’s biggest and fastest-growing oil-consuming region, which already takes 60 per cent its oil exports at some 3.8 million barrels a day (bpd).

“Zhenhua helped Iraq to penetrate the Chinese market and make more revenues for Iraq,” said a senior source familiar with the discussions on the deal, adding that a 50/50 proposed joint venture could be finalised in October or November.

Another source said the deal was pending regulatory approvals, giving no further details.

It is not clear where the JV would be located, but two of the sources familiar with the negotiations said the port city of Tianjin, near Beijing, was under discussion. Singapore is also among the options, they said.

All four sources declined to be named as they were not authorized to discuss commercial matters with media.

Zhenhua declined to comment. Somo did not immediately respond to an email request for comment.

China is under the pressure to cut oil purchases from Iran, OPEC’s third-largest producer, as the United States re-imposes sanctions on Tehran and threatens to choke off the country’s oil exports to zero.

Reuters

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