Iran to curb oil storage with term, refinery deals

SINGAPORE, June 15 (Reuters) Iran's oil marketing arm aims to secure a deal soon to sell half of its Soroush and Nowruz crude output to a domestic plant, allowing it to cut back significantly on floating storage, a top official said on Thursday.

A deal to sell about 100,000 barrels per day (bpd) of the offshore crude to the Bandar Abbas refinery, which intends to blend them with lighter condensate, would take up the remaining Soroush/Nowruz supply not committed into term contracts with an Asian and a European refiner sealed this year.

''Due to recent term contracts, most of the crude in storage (floating) has been sold, and increased spot sales each month will see our need of just about two to three vessels for storage,'' said Hojjatollah Ghanimifard, executive director of international affairs at the National Iranian Oil Company (NIOC), told Reuters.

He declined to say when a deal with the 232,000-bpd plant at Bandar Abbas could be sealed.

Industry and trade sources had said NIOC boosted its fleet of supertankers used for floating storage to 10 last month to hold about 20 million barrels of mainly Soroush and Nowruz crude due to difficulty finding buyers for the acidic heavy-sour grades.

The storage was also the result of reduced refinery demand during the second quarter, when many plants schedule maintenance, forcing NIOC to scale back exports even as wellhead production ran at near normal rates, officials have said.

Only a few refiners in the world have the sophisticated equipment needed to process Soroush or Nowruz crude without blending it with other better-quality crude grades, industry sources say, making it tricky to find steady customers.

Production at the field has been inconsistent from the beginning.

Royal Dutch Shell, the developer of the fields, had initially hoped to reach capacity by March 2004, but it had to delay that target by over a year due to technical problems.

The fields were shut down several times last year for unplanned maintenance. It currently pumps about just under 200,000 bpd.

REUTERS CS SSC1355