MOSCOW (Reuters) - Iraq’s semi-autonomous region of Kurdistan has begun targeting Baltic crude markets in north-western Europe, rivaling traditional Russian supplies and increasing an oil glut in the region, trading sources said and shipping data showed.
At least three vessels with Kurdish oil arrived in the Baltic ports of Gdansk in Poland and Butinge in Lithuania in October-November, traders told Reuters.
“These are the first Kurdish barrels going to Europe’s north,” a source with a trading house told Reuters.
Kurdistan this week for the first time detailed its oil exports operations, explaining how it bypassed Baghdad since 2014.
It says its exports are now going to as many as 10 countries but it is premature to disclose final destinations as Iraq’s state oil firm Somo is still threatening to take buyers to court. Reuters previously reported Kurdish oil has reached Israel and Hungary.
The arrival of Kurdish barrels further intensifies the fight between Russia and producer group OPEC for market share following Saudi Arabia’s sale of crude to Poland and Sweden.
Trading sources said a Suezmax vessel, Sikinos, with Kurdish oil on board arrived in the Baltic Sea port of Gdansk late in October, and the port will see another cargo on board Minerva Georgia in November.
Poland’s top refiner, the state-controlled PKN Orlen, will ship 100,000 tonnes of Iraqi Kirkuk oil to its Lithuanian Mazeikiu refinery later this month, shipping data and traders indicated on Tuesday.
The cargo was loaded in the Turkish port of Ceyhan on Nov. 8 and should arrive in the Lithuanian port of Butinge on Nov. 22, the Reuters shipping data showed.
PKN could not provide immediate comment but its Chief Executive Jacek Krawiec told the Rzeczpospolita daily this week the company was expanding its supply base.
“This is the first such cargo that opens new possibilities of oil supplies,” Krawiec said, commenting on Saudi oil shipments. “Any time now we will be witnessing another delivery from a new direction – Kurdish oil will reach the refinery in Mazeikiu.”
Analysts from think-tank JBC Energy said on Wednesday the rivalry between various grades was the primary reason for aggravating a crude glut in Europe and slumping prices.
“...Refiners are currently spoiled for choice with (Russian crude) Urals cargoes in Rotterdam trading at three-year lows, the December-loading Saudi Arabia Light prices for north-west Europe adjustment at a six-year low and a Nigerian overhang dragging differentials to ten-year lows,” it said.
This will likely increase as European buyers prepare for a return of Iranian barrels once sanctions are lifted.
“There are big expectations concerning the Iranian direction. The Iranians want their oil to be sold in Europe after sanctions are lifted. This will open new possibilities for our refineries,” Krawiec said.
Additional reporting by Agnieszka Barteczko in Warsaw and Dmitry Zhdannikov in London; editing by Susan Thomas