Iraq's new Gulf oil export terminal is operating at less than a third of its capacity due to its pumping limitations and some Western firms' concern that the facilities may not be safe, industry and market sources said on Tuesday.
Iraq reopened two berths at the Khor al-Amaya terminal in late February, touting an increase of 300,000 to 400,000 barrels per day (bpd) in southern export capacity.
But in the nearly four weeks since it opened, average exports have amounted to 100,000 bpd. Only three tankers have completed loading there, all for Indian refining companies.
On Tuesday, Spain's Cepsa became the first Western company to load a tanker there, berthing its own Sandra Tapias, but most other US and European firms appear more reluctant.
Khor, dormant for decades except for a brief stint of smuggling just before the war last year, is located seven kilometres (4.35 miles) east of the main Basra Oil Terminal, which is working to capacity of around 1.6-1.7 million bpd.
The two terminals share some pumping infrastructure, which limits overall southern exports to around 1.8 million bpd for the moment, industry sources say.
Baghdad was keen to reopen the terminal after Basra crude exports fell in February due to weather-related closures, but Iraqi industry sources say Khor al-Amaya was not intended to be used to capacity immediately.
Iraq's State Oil Marketing Organisation (SOMO) has approached customers on a case-by-case basis to ask whether they would be interested in using Khor al-Amaya, but market and shipping sources say many companies are put off by sub-standard safety procedures and infrastructure.
"They appear not to have some of the safety equipment we need," said one major lifter. "That will stop a lot of activity."
Several lifters say they have yet to make a final decision on whether to use the terminal, awaiting a first-hand report on the facility, which few in the industry have visited.
Iraqi officials say they believe Khor will gradually see more activity as it gains acceptance among US and European companies. SOMO has introduced a 10-cent-per-barrel discount for lifters willing to use Khor al-Amaya in March and April, but for many major customers this is not enough to overcome additional shipping costs.
About half of SOMO's customers load two-million-barrel cargoes at Basra. As Khor al-Amaya is only able to load one million barrels per tanker, customers would incur additional shipping charges by berthing again at Basra.
For companies that only load one million barrels or less at a time, including most European refiners such as Cepsa, the financial incentive to ship from Khor al-Amaya may be greater.