RE: GKP23 Mar 2023 19:57
I see the KRG is trying to impose a lower price for our crude oil going by todays presentation calling it a Kurdish mix or something similar. Its a con clear and simple and they have been doing it for years, please let me explain what they are actually doing verses what it sounds like.
Well our oil is going out on one export pipeline and is probably mixed with other blends from other producers like Genel, so they like to call it Kurdish mix, sounds fair enough, but its not the true picture.. Please bear with me..
Modern refineries are very complex, firstly flashing of the sweetest products in distillation towers, then perhaps a Vacuum distillation tower , followed by a cat cracking plant , and the heaviest molecules like Residues and Heavy fuel oil, re processed in Residfiners and heavy crackers. Expensive process and a complete modern one would cost at least 20 Billion, with the heavier ends processing and sulphur processing equipment wise the most expensive due to the extreme pressures and metallurgy requirements along with catalyst consumption.
You get the picture, however Iraq only has simple small distillation units so what are they doing. They are slip streaming off and doing a once pass through the basic still and cherry picking off the easy Heavy cat napthas and gasoil (petrol and gasoline), then chucking everything else back into the same pipeline including sulphur.
They are not paying for what they take as feed, but probably just what they take as product, which isn't what anyone else can do.
This is easily picked up by tank analysis and is well known in the industry as you can see the normal quality components are reduced. Also will then command a lower price, and limit the rate of which this crude slate can be processed. All refiners are different so it will limit run rates or whether it can be run at all. As an example UK refiners were built for Brent crude which is a sweet light crude so could only run low rates of a heavier higher sulphur crude which would not be economic.
So in a nutshell, we are not getting a fair crude price due to these actions. Saying that if thats the only issue and they pay bills on time (which has always been an issue), we are probably off to the races.
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