Iraq Turns to New Gasoline Suppliers

Source: Reuters 5/30/2013, Location: Middle East

Baghdad has turned to France's Total and Japan's Toyota Tsusho Corp for gasoline after Washington blacklisted an Iranian company that had been delivering product, industry sources said.

Sima General Trading Company, based in the United Arab Emirates (UAE), had been supplying Iraq with up to three cargoes of gasoline per month - about a quarter of what Iraq now imports.

But in mid-March, the U.S. Treasury Department identified the company as part of a UAE-based network of Iranian government front companies that did business on behalf of previously sanctioned entities such as Naftiran Intertrade Company (NICO)- a unit of the National Iranian Oil Co.

Washington persuaded Baghdad to stop the trade - worth over $40 million a month at current prices - the sources said, and Total and Toyota Tsusho will step in from June through the end of the year. They join a pool of companies supplying Iraq.

Total will supply two cargoes of gasoline a month and Japan's Toyota Tsusho will supply one, according to the industry sources. Each cargo is roughly 15,000 tonnes. Total will deliver its first shipment in June 13-15.

"We are asking for Iraq, as well as other countries, to reduce the import of crude oil and oil products such as gasoline from Iran," said a U.S. diplomat.

"Both Treasury and State have been very active in talking with our international partners."

Due to the size of Iraq's oil products tenders, traders closely monitor purchases by its State Oil Marketing Organisation (SOMO).

SOMO could not be reached for immediate comment.

SOMO last November finalised a deal to buy 1.56 million tonnes of gasoline from a pool of suppliers and the contract was awarded to rival oil firms Vitol and Glencore, along with oil major BP and Sima.

Despite being OPEC's second largest crude oil producer, years of violence, militant attacks and low investment have forced Iraq to rely on imports to meet demand for oil products like gasoline as its own refineries struggle.

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