* Basra spot price assessment needed on growing trade volume
* Talks underway for Basra to become deliverable crude for
Dubai -source
SINGAPORE, Aug 7 (Reuters) - Leading pricing agency Platts
will soon start a new price assessment for Iraqi Basra Light
crude as the trading volume of the grade grows along with higher
output, a senior company official said on Tuesday.
Platts, a unit of McGraw Hill, provides the dated
Brent benchmark that is used to price about two-thirds of global
crude and it also assesses Dubai and Oman, which are benchmarks
for Gulf crude exports.
Iraq overtook Iran as OPEC's second-largest producer in June
and the assessment could pave the way for Basra Light to become
one of the grades used to assess the Middle Eastern marker Dubai
that prices about 12 million barrels per day of Gulf crude
exported to Asia.
Including Basra Light may improve liquidity for the Dubai
crude as output of the benchmark grade declines, making the
marker more reflective of fundamentals. It will also increase
trading in Basrah Light as participants seek to take positions
in a grade that could become part of the benchmark.
"Basra Light's production has grown a lot," Jorge
Montepeque, Platts' global director of market reporting, told
Reuters. "It obviously deserves to have its own quotation based
on its volume and that it's traded on spot."
The firm declined to say when the assessment would start as
it needs time to study the crude quality and survey logistics
such as terminals and storage facilities, even though rivals
Argus Media and Japan's RIM are already assessing the crude.
Iraq's oil output has rebounded as the country recovers from
decades of war and crippling sanctions. The country pumped 2.97
million barrels per day (bpd) in July.
Exports from Basra in the south were at 2.216 million bpd in
July, the head of Iraq's State Oil Marketing Organisation (SOMO)
said last week.
"The analysis takes time and engagement with the industry. I
think we're nearing it," Montepeque said.
The process is more complex than the assessments for other
grades as "there are three locations from where Basra Light is
supplied and there are also differences in quality," he said.
Platts and Iraq's SOMO are holding discussions to add Basra
Light as a deliverable crude for the Dubai benchmark, an
industry source said.
"The view is that by the end of the year quality issues will
be sorted and they should see signs of one particular terminal
emerging for the delivery point," the source said.
Basra Light is also an attractive choice as it can be traded
in the spot market without any destination restriction, unlike
other Gulf grades, he said.
Platts will need to launch the Basra Light assessment before
considering using the grade as a deliverable crude for Dubai,
Montepeque said.
"To us that question (about whether Basra Light will become
a deliverable crude to Dubai) is valid because it's in the same
geographical vicinity," Montepeque said.
"But before that, we need to review and monitor it and
critically launch the spot assessment."
(Reporting by Florence Tan and Luke Pachymuthu; Editing by
Clarence Fernandez)