Iraq is seeking its first ever crude oil prepayment deal to boost its finances as the country struggles to cope with lower oil prices and demand due to the coronavirus pandemic, its oil ministry said on Monday.
The country is seeking a five-year prepayment starting January 2021 until December 2025 to be repaid with cargoes of its Basra crude, according to a letter sent by state oil marketer SOMO to its customers and seen by Reuters.
An official at Iraq’s oil ministry confirmed the document. In the letter dated Nov. 23, SOMO said it will accept bids from possible counterparties until Nov. 27 at 1600 Baghdad time.
“Prepaid oil cargoes are part of an urgent plan to boost state budget and overcome financial crisis. We have obligations towards OPEC to cut output, we have to repay foreign companies debts and also to keep our economy standing and this is why we need cash in advance for some of our oil sales,” the official said.