Opec member Iraq has formed a joint venture with a shipping company owned by Arab states to transfer, store and trade crude and oil products, according to official documents and industry sources.
Middle East oil producers are venturing into buying and selling oil to boost their incomes as a sharp drop in crude prices since mid-2014 has forced the industry to become more efficient and commercially focused.
The venture, Al Iraqia Shipping Services and Oil Trading (AISSOT), will handle a “plethora of activities ranging from trading of petroleum products, ship chartering, oil terminals, various marine services, and bunkering”, according to a company statement.
AISSOT is owned by state firm Iraqi Oil Tankers Co (IOTC) and Arab Maritime Petroleum Transport Co (AMPTC), a pan-Arab company in which Arab oil producers such as Saudi Arabia, the UAE and Kuwait hold a share.
IOTC owns a stake of 22.5 per cent in AISSOT, according to a copy of the signed 20-year contract.
“Formation of AISSOT is based on Iraqi Oil Ministry vision to further strengthen activities of two major entities i.e. AMPTC and IOTC in the field of shipping, marine services, and oil trading,” the company said in a statement. “It is also one of Iraqi Oil Ministry’s initiatives to develop national oil companies to international levels.”
AISSOT, which will soon start bunkering operations at ports in southern Iraq, is the second oil venture set up recently by the country.
State oil marketer SOMO and Russia’s Litasco formed a joint trading company in Dubai to market crude and may expand into oil products and petrochemicals, industry sources said.
“The new venture will have exclusive rights for transportation of crude and refined products. It will develop other projects include trading starting with fuel oil and products and can eventually get into crude oil allocations,” said an industry source.