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. Last Updated: 07/27/2016

Russia Likely to Up Iraqi Oil Imports

Russia looks set to boost the amount of Iraqi oil it lifts under the second phase of the UN "oil-for-food" scheme, with 10 companies looking for a slice of exports compared with eight in the first phase.


With just two days to go before Iraqi oil is due to return to world markets under the United Nations' program, eight Russian firms are already in Baghdad for talks. Two deals have been signed, and several more are expected by the end of the week.


Warm political ties between Moscow and Baghdad promise to secure a smooth passage for Russian negotiators, in contrast to British and Japanese firms apparently excluded from the second phase, for what Mitsubishi called "political reasons."


Yury Agababov, deputy general director of Russian oil trader Zarubezhneft, which is coordinating Russian purchases of Iraqi crude, said two deals had been signed between Iraq and Russia.


"Two deals were signed in Baghdad on Saturday," Agababov said. "Zarubezhneft signed a deal to lift 5.55 million barrels, and Alfa-Eko another for 2.65 million barrels."


Under the first 180-day program, Zarubezhneft had a contract for 3.65 million barrels. Alfa-Eko was the biggest Russian lifter of Iraqi oil with contracts for 6.89 million barrels.


Russian traders said it was early to compare individual companies' allocations, because each company could sign more than one deal and some Russian firms lifted Iraqi oil on the spot market as well as by contracts. But the general opinion among participating Russian firms was that overall volumes would increase this time.


Agababov said the list of Russian companies taking part in the second stage of the deal was set to grow to at least 10 from eight in the first stage.


"All eight companies that took part in the first phase want to continue to lift Iraqi oil," he said. "And the next stage is that two more companies -- Onako and Sidanko -- are likely to buy Iraqi oil, taking the total to 10."


Iraq made room for higher liftings for political allies after blocking participation by British and Japanese firms.


The oil-for-food program allows Iraq to sell $2 billion worth of oil over six months. It went into effect last December and was renewed for another six months on June 8.


But the second phase is behind schedule after a two-month delay to modify distribution plans.


Russia was the single biggest lifter in the first phase, taking 28.54 million barrels, or 23 percent of total Iraqi exports under the deal.